According to the latest annual global survey released Tuesday by Canadian think tank the Fraser Institute, South Africa has fallen out of the top ten mining investment destinations on the continent and dropped 11 places to 67th globally.
The institute’s Annual Survey of Mining Companies 2014, rates 122 jurisdictions around the world based on their geologic appeal and the extent to which government policies encourage exploration and investment.
“While it is useful to measure the attractiveness of a jurisdiction based on policy factors such as onerous regulations, taxation levels, the quality of infrastructure and so forth, investment decisions are often based on the pure mineral potential of a jurisdiction. Indeed respondents consistently indicate that roughly only 40% of their investment decision is determined by policy factors,” according to the report.
The survey covers Central African Republic, Egypt, Lesotho, Mauritania, Morocco, South Sudan, Sudan, and Uganda for the first time, but it’s at the top of the rankings that trends are most visible. And it’s not encouraging for the continent’s long-time stalwart.
South Africa is ranked the 11th most attractive African destination for investment in the resources sector behind the Democratic Republic of the Congo.
Troubles in the mining sector is also reflected in the country’s broader economic performance.
GDP growth in 2014 was the lowest for South Africa in five years. An unprecedented five-month wage strike by platinum mine workers, followed by another prolonged strike by more than 220,000 metalworkers and engineers, dragged growth down to 1.5% for the year.
Rolling electricity blackouts (or load shedding at it is referred to in the country) as the power utility struggles to keep its creaking coal-fired plants running have also badly shaken business confidence.
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