Licensing reform to lift competiveness of South African mining

South Africa’s mining sector contributes 9% of GDP directly and over 30% in foreign exchange earnings, writes Minister of Mineral Resources Ngoako Ramatlhodi. Now new regulatory reforms are set to boost this contribution even further.

Khumba Iron Ore articleA portion of the massive Khumba Iron Ore mine in the Northern Cape. In 2010, the Citibank Group affirmed South Africa as the wealthiest mining jurisdiction, with total mineral reserves estimated at US$2.5-trillion, exclusive of the energy commodities. (Image: Brand South Africa)

Ngoako RamatlhodiMinister of Mineral Resources Ngoako Ramatlhodi

International investors continue to see South Africa as a reliable investment destination with foreign direct investment projects in in the country having incrementally grown between 2007 and 2012.

At one of the world’s premier business gatherings, the World Economic Forum in Davos from 21to 24 January 2015, Team South Africa will bring to the roughly 2 500 delegates the message that the country is open for business and remains an attractive and reliable investment destination. We’ll be driving the point that South Africa remains a competitive business and investment destination of choice, despite some challenges, which are being resolved.

The mining industry continues to make a valuable contribution to the South African economy, most notably in terms of foreign exchange earnings, employment and economic activity. In 2010, the Citibank Group affirmed South Africa as the wealthiest mining jurisdiction, with total mineral reserves estimated at US$2.5-trillion, exclusive of the energy commodities. Further, the available geological information indicates that South Africa remains highly prospective for discovery of more world-class deposits.

The mining sector contributes 9% of GDP directly and over 30% in foreign exchange earnings. The sector generates an annual income exceeding R330-billion and accounts for 10% fixed capital formation in the country. Mining also contributes significantly to the fiscus, including an annual contribution averaging some R17-billion in corporate tax and R6-billion in royalties.

The future of the industry and its impact on the South African economy and social infrastructure constitutes the agenda of the strategic tripartite structure, known as the Mining Growth, Development and Employment Task Team (MIGDETT), with significant progress being attained to date. The President-led Framework Agreement for a Sustainable Mining Industry corroborates the significance attached to stabilising the mining industry and has borne fruit, with production of minerals in 2014 expected to be higher than the preceding year by about 6%.

With a view to ensuring the sustainability of the industry now and in the future, the Departments of Mineral Resources and Environmental Affairs announced the introduction of a new system, on 8 December 2014, to further improve the competitiveness of South Africa’s mining sector. The One Environmental System, as it is known, is aimed at streamlining licensing processes of various authorities. It represents the government’s commitment to improving the ease of doing business, and further enhances South Africa’s global competitiveness as a mining investment destination.

Relevant authorisations in respect of mining, environment and water use will now be issued within 300 days. If a decision is appealed, an additional 90 days will be granted to finalise the process. Environmental mineral resource inspectors, who have the same powers as environmental management inspectors to enforce the provisions of the National Environmental Management Act, have already been designated.

Under the system, the minister of mineral resources is responsible for issuing environmental authorisations and waste management licenses for mining and related activities. At the same time, the environmental affairs minister is the appeal authority for these authorisations. This new system was pronounced by President Jacob Zuma in his State of Nation Address in February 2014.

South Africa is becoming an economic force to be reckoned with in this rapidly changing global economic, mainly due to the long-term socioeconomic vision and the associated policy-making of its government.

Its successes, in terms of its global perception and rankings in key influential indices, such as the World Economic Forum Global Competitiveness Report, the World Bank Ease of Doing Business Index, the World Economic Forum Travel and Tourism Index, could set a benchmark for other mining jurisdictions to follow this global trailblazer.

Team South Africa in Davos

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