Sector spend to grow with new laws bedded down - Nogxina
September 7, 2007
By Justin Brown
Perth - The South African government is optimistic that the mining sector will attract more investment now that teething problems associated with new mining laws have been soothed.
Mining investment in South Africa slowed after the Minerals and Petroleum Resources Development Act was promulgated in May 2004, minerals and energy director-general Sandile Nogxina told the Africa DownUnder Conference yesterday. This was partly due to uncertainty about the implementation of the law.
He said a study found that currency volatility, rising costs and infrastructural constraints had further impeded capital expenditure in the sector.
However, last year there was a 5.6 percent increase in mining investment when compared with 2005, Nogxina said.
"This indicates the commencement of a new upsurge in mining and exploration expen-diture in South Africa, as was the case after the implementation of the Minerals Act of 1991," he said. Nogxina expected investment to increase this year and next, although he could not quantify the pace of growth.
The government believed that mining investment should not be limited to mineral extraction but should extend throughout the value chain.
"Our government is committed to beneficiation because adding value to our minerals not only creates jobs, but also grows and diversifies our mineral basket," Nogxina said.
Three pieces of legislation had been introduced to bolster beneficiation, two of which focused on diamond processing.
Nogxina said the latter laws were aimed at increasing the availability of rough stones in the local market, while the Precious Metals Act would facilitate local fabrication of gold and platinum jewellery.
A state diamond trader has already started operating. Its functions include acquiring rough diamonds, supplying them to local cutters and polishers, and promoting research.
"We expect to stimulate a vibrant jewellery industry in South Africa," Nogxina said.
"We are also looking at the beneficiation of other strategic minerals such as chrome, iron ore, manganese and titanium. Intense research and development is being undertaken in this region."
Commenting on the black empowerment deals worth R11 billion announced by Anglo Platinum (Angloplat) on Tuesday, Nogxina said he appreciated the fact that the company had "at long last" made a move in the right direction.
"Angloplat's empowerment deal is better late than never."
The world's biggest platinum producer first applied for new order mining rights in 2004, but has yet to receive a single conversion. Companies must fulfil transformation criteria to qualify for new rights.
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