"Transformation" of mining looks like intentional destruction
During his state-of-the-nation address a month ago President Jacob Zuma declared that "mining has always been the backbone of our economy". Speaking in October 2013 at the opening of an extension of the Venetia diamond mine operated by De Beers in the north of Limpopo, he said mining was "poised for growth and expansion".
In the past year, however, South Africa's overall attractiveness as a destination for mining investment has dropped from 66 out of 109 countries to 74 out of 104. The ranking comes from the Fraser Institute, a Canadian research house headquartered in Vancouver. It is based on 350 replies to a questionnaire sent to mining executives in countries around the world towards the end of last year.
Our ranking for the attractiveness of mining policies is even worse. We are at 84 out of 104, the third worst in Africa. We beat only South Sudan and Zimbabwe, and trail far behind countries that include Botswana (ranked at 12) and even Zambia (ranked at 43), whose mining industry Kenneth Kaunda helped to destroy.
Fraser's "policy perception index" is designed as a "report card" for governments on how attractive their policies are "from the point of view of an exploration manager". In September last year Mr Zuma said that "investment in exploration and extraction has dropped significantly". Now he knows why.
The question is whether he regrets this or welcomes it. It was once possible to argue that the damage done to the mining industry by the demands upon it were an unintended consequence of policies set forth in mining, labour, and other legislation. That argument is looking more and more flimsy.