JOHANNESBURG (miningweekly.com) – It has generally been acknowledged among industry insiders that, compared with its global counterparts, Africa’s mining industry has significantly underperformed in recent years, despite market challenges and the continued commodity slump impacting on the global mining industry.
Moreover, South Africa – once considered the darling of mining in Africa and a gateway to the continent by investors – has been scapegoated as one of Africa’s primary underachievers.
It was also acknowledged by – among others – Mineral Resources Minister Mosebenzi Zwane at this year’s Investing in African Mining Indaba that, owing to a lack of reliable infrastructure and ongoing regulatory uncertainty. South Africa missed the boat on the last commodity supercycle.
The cycle, which soared because of rising demand from emerging economies, especially China, in the early 2000s, is unlikely to reoccur in this lifetime, according to industry commentators.
“South Africa missed the commodities boom, which spanned from 2004 to 2011, and, thus, a unique opportunity to develop infrastructure, as well as properly stimulate the upstream and downstream mining sector,” says law firm Herbert Smith Freehills partner and Africa co-chairperson Peter Leon, who attributes the country’s failure to take advantage of the upcycle to regulatory inefficiency and inadequate infrastructure, which inhibited both mineral production and exports.
South Africa also failed to prepare for the subsequent downturn, which started to stoop in 2008 and 2009, midway between the supercycle, and continued to slump into 2013, sparked by the credit and sovereign debt crises, says EY mining and metals sector leader Wickus Botha.
This inaction, in particular, has since birthed understandable doubt about whether South Africa’s mining industry will be able to recover from the current slump to prepare for the next uptick.
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