South Africa wants to boost foreign mining investment, but not if it fails to help develop a country still suffering from huge inequality of wealth, the deputy president said on Monday.
Phumzile Mlambo-Ngcuka told a seminar on mining investment she was aware of a debate about the merits of sealing major deals with resource-hungry countries like China.
”They say the danger is that China is going colonise us, take our minerals, with its big appetite for commodities and leave us just nothing,” she said in a speech.
”We need to make decisions … about what is in our best interests and sometimes the trade-off means we may delay the highest profitability and investment by those countries who just want to grab the minerals and run.”
She said South Africa’s investment policies strived to achieve a balance between profits for investors and benefits for the country as a whole, where around a quarter of the population is unemployed and the gap between rich and poor is one of the world’s widest.
”So when we think about what we need to do to make this country work to attract investment, it cannot be at the expense of adjusting systemic poverty,” said Mlambo-Ngcuka, who previously served as mining minister.
South Africa is estimated to have lost up to R5-billion in mining investment due to constraints such as inadequate infrastructure, a strong currency, regulations and lack of skilled workers, Sandile Nogxina, director general of the minerals and energy department, told the seminar.
Fall in mining investment
Real fixed mining investment in South Africa — the world’s biggest producer of gold, platinum and ferrochrome — fell by 20% in 2004 and 13% in 2005 before recovering by 7% last year, a study prepared for the seminar said.
This occurred during a boom in commodity prices that saw investment surge in other countries such as Australia and Canada, Nogxina added.
A representative of industry group the Chamber of Mines said the rebound in fixed investment in mining last year showed that some obstacles were being removed.
”We are making progress on a number of issues,” chamber chief economist Roger Baxter said.
While South Africa’s mining sector directly accounts for about 7% or R120-billion of gross national product, the figure rises to 18% when indirect effects are included, he said.
Mining, which employs nearly 460 000 people, is responsible for 52% of South Africa’s direct and indirect merchandise exports. – Reuters