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Cape Town, South Africa | AFP | Renewed optimism about South Africa’s mining future coursed through the industry this week, focused on hopes of pro-business reforms under the ruling party’s new leadership.
The world’s largest mining investment conference started in Cape Town on Monday, as the ANC party met to discuss whether President Jacob Zuma could soon be replaced by his deputy Cyril Ramaphosa.
Ramaphosa, a wealthy former mining executive, recently took over as head of the African National Congress from Zuma.
“For the first time, it’s possible to look forward with reasonable hope rather than a sense of foreboding,” Roger Baxter, CEO of the South African Chamber of Mines, said as the “Mining Indaba” conference opened.
More than 460,000 people are employed in South Africa’s mining industry.
But an impasse between government and business over key legislation has stalled the industry, while an ongoing corruption scandal surrounding President Zuma has scared off investors.
The election in December of Ramaphosa to lead the ANC was cause for “a new sense of hope”, said Baxter.
“There’s a positive wind of change blowing,” he said.
South Africa suffered two ratings downgrades last year, while relations between the industry and the government collapsed in a stand-off over the mining charter, a guiding document to transform the racial ownership of the sector.
A new version of the charter was introduced in June, but all sides say they were not adequately consulted in the drafting process.
– Industry tensions –
Last year, the Chamber of Mines said it had lost confidence in Zuma’s mineral resources minister Mosebenzi Zwane, adding that the charter “would destroy the industry” if fully implemented.
An application to have the charter set aside will be argued in court later this month.
Zwane has also been implicated in the wide-ranging “state capture” corruption scandal currently rocking South African politics.
Before Ramaphosa took over the ANC, the mining outlook was “subdued,” Peter Leon, mining analyst and co-chair of legal firm Herbert Smith Freehills’ Africa Group, told AFP.
“Global investors with an interest in South Africa really adopted a wait-and-see attitude until after the ANC’s elective conference,” he said.
“Ramaphosa’s a very effective communicator and he’s making all the right noises.”
The reaction to Ramaphosa becoming ANC president — defeating Zuma’s former wife Nkosazana Dlamini-Zuma — was immediate, with the rand strengthening against the US dollar.
“There’s no question that the sentiment towards South Africa has improved considerably,” explained Bureau for Economic Research senior economist Hugo Pienaar.
