South Africa ranks as one of the richest countries in natural resources from gold to iron ore. The problem: few companies want to deal with the headache of getting it.
Strikes, unreliable power supply, a mining code that’s been under review for six years, and disputes over compulsory holdings by local black shareholders have dented investor confidence in the country. Many nations on the continent have similar problems.
Companies are voting with their feet: BHP Billiton Ltd., the world’s biggest miner, exited the nation last year, leaving only five of the 40 largest commodity producers with operations in South Africa.
Investors “want certainty, they want a clear regulatory environment, and they want an environment where companies are not held hostage by unreasonable demands and unreasonable cost escalations,” said Neal Froneman, chief executive officer of Sibanye Gold Ltd., the biggest producer of bullion from South African mines. “They can’t operate or invest in the current environment.”
Sibanye was spun out of Gold Fields Ltd. three years ago this week, when the latter wanted to reduce its presence in South Africa.
The country has the world’s biggest reserves of platinum, third-largest of gold, is the biggest manganese producer and is Africa’s largest source of iron ore and coal. Yet its influence is declining.
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