While Zimbabwe and Mozambique ranked in the bottom ten of the most attractive jurisdictions in the world for mining investment, the Canada-based Fraser Institute’s ‘Annual Survey of Mining Companies 2016’, shows that the continent continues to look better for investors and ranks ahead of Oceania, Asia, Latin America and the Caribbean, and Argentina in investment attractiveness.
The survey ranks 104 jurisdictions around the world based on geologic attractiveness and the extent to which government policies encourage or deter exploration and investment.
The institute attributed the positive sentiment toward the continent’s mining sector to the median score on policy factors having improved in 2016. This was also the case for the region’s median investment attractiveness score.
However, traditional mining powerhouse South Africa scored poorly on the survey’s policy perception index (PPI), at 47.5 points, ranking only above South Sudan and Zimbabwe.
South Africa, did, however, score higher, at 53.62, on the investment attractiveness index, but this was down from 58.04 in the previous year, ranking the country in seventy-fourth place globally. The country ranked ahead of Zimbabwe, however, which had a score of 41.84, Mozambique with a score of 41.87 and Sierra Leone with a score of 46.26.
“Presently before the courts is a decision regarding local ownership in accordance with the existing black economic empowerment (BEE) policy. Once deemed BEE compliant, shareholdings are being sold. Government takes the position that companies must remain BEE compliant by issuing new shares.
“There is a grave risk to ownership with the government’s record on passing and then modifying laws to achieve its policy goals. The environment in South Africa is not predictable,” the survey authors stated.
Meanwhile, top performers on the continent included Côte d’Ivoire, which ranked seventeenth, Botswana in nineteenth place and Ghana in twenty-second place.
“Botswana’s slightly higher score [of 77.62, compared with 68.32 in 2015] on the PPI reflects decreased concerns over labour regulations, the availability of labour and skills and infrastructure,” the survey stated.
The Democratic Republic of Congo (DRC) recorded the biggest improvement in Africa, based on miners’ perceptions of policy, with an improvement of over 17 points, enabling the country to move up to seventieth position, from eighty-seventh place in the previous year.
Investors displayed decreased concern this year over socioeconomic agreements/community development conditions, political stability and labour regulations in the DRC.
Meanwhile, Namibia’s score and rank deteriorated for the second straight year. In 2014, Namibia was ranked as the nineteenth most attractive jurisdiction in the world when only policies were considered.
“A draft policy of local previously disadvantaged persons is being circulated. It models itself after South Africa which has clearly failed in its broad-based objectives. There is great danger to all existing or new companies in Namibia,” the survey authors noted.
The country fell to twenty-ninth position in 2015 and dropped again to rank thirty-eight this year. After this year’s decline, Namibia no longer ranks as the second-most attractive jurisdiction in Africa based on policy. Miners expressed increased concern over uncertainty regarding the administration, interpretation or enforcement of existing regulations, the taxation regime and trade barriers.
Two Canadian provinces – Saskatchewan and Manitoba – were the top two most attractive jurisdictions in the world for mining investment, followed by Western Australia, the survey revealed.