[miningmx.com] — APATHY towards the significance of “traditional’
foreign investors would likely undermine any effort to increase the contribution of
mining to the social transformation of the country.
In a critique of the State Intervention in the Mineral Sector (Sims) policy document
of the ANC, the South African Institute for Mining and Metallurgy (SAIMM) said
foreign investment was critical in the industry and that one couldn’t ignore the effect
of rhetoric or interventionism.
The report, called The Rise of Resource Nationalism: Resurgence of State Control in
an Era of Free Markets or the Legitimate Search for a New Equilibrium?, was
compiled by SAIMM’s Michael Solomon and sponsored by Royal Bafokeng.
It said the proposed myriad of taxes and levies suggested in the Sims document
would not be attractive to investors, even though some of these suggestions might
have merit.
“On the question of deterring foreign investment in mining, it raises the question of
the all-too-common South African perception that the country is a desirable
investment venue and that one can ignore the attitudes of investors who are all too
often seen as exploiters of the poor and exporters of the country’s mining benefits,’
read the report. “There is a pervasive attitude among many South African
bureaucrats, politicians and activists that we as a country are agnostic to [those]
who invest in the country.’
It said the progressive disinvestment and failure to reinvest in South Africa of the
larger multi-nationals (despite their denials to this effect) was highly problematic.
“There will be takers for their disposed assets,’ it read. “However, these takers are
all too often second-tier South African players, who are also foreign funded, who
have fewer resources, less reputational risk and fewer shareholder pressures around
social licence and environmental issues than the major players.’
Much of the new investment, the report said, came from new players who “are
inevitably less sensitive to social licence issues,’ and less experienced in issues
around sustainability.
“While one might not like the considerable arrogance of the large mining multi-
nationals, they have been forced to comply with international protocols around social
and environmental management and financial transparency. By contrast, the new
players often seem reluctant to subscribe to protocols such as the Equator Principals
and EITI, which is not good for social development.’
This is critical as the entire thrust of the Sims proposals is to leverage the mining
industry towards poverty alleviation and the more equitable distribution of wealth.
“Should these aggregated measures lead to the disinvestment of these major
multinationals because it is easier and more profitable to do business elsewhere, it is
highly likely that their substitution by second-tier players may have the propensity
to negate the intended consequences of the strategies mooted in the Sims report,’ it
said. “The direct benefit on the ground of mining company social programmes is
often much more tangible to the beneficiaries than dispersed government
imperatives.’
