Africa needs to strengthen its data and statistical capacity, especially in civil registration, to be able to respond to coronavirus and future public health challenges, according to a report from the Mo Ibrahim Foundation.
AngloGold exit signals urgency of South African power reforms
AngloGold Ashanti’s sale of the last of its South African businesses to Harmony this month was no great surprise.
South Africa gold producers are facing tough operating conditions due to the depth of mines, issues posed by state power company Eskom and “a perceived lack of tax incentives and concessions for early-stage investment,” says Yann Alix, head of Ashurst Africa in London.
AngloGold had mined in South Africa for more than 100 years. Gold Fields, which has operated in South Africa since 1887, now has only one mine left in the country. Policies such as tax holidays on capital expenditure and friendly depreciation schedules may incentivise more companies to take on the risks associated with mining in South Africa, Alix says.
Tax incentives for new gold mines adopted in the 1950s helped spur the development of the industry until the 1980s, says Peter Major, director of mining at Mergence Corporate Solutions in Cape Town.
- But negative legislation affecting mines and especially gold since the 1990s now far outweighs those incentives, he says.
- “There is no realistic chance of South Africa even regaining top producer in Africa,” which it lost to Ghana in 2019, he says.
- “Government doesn’t see the need for that – so it’s very, very unlikely to remove any of the impediments that have destroyed our gold mining industry”.
One of South Africa’s problems is that much of its gold is buried deep and is therefore more expensive to mine. Major says this is an excuse. Arguably half of the world’s known gold resources are still in South Africa, he says.
There is still a lot of gold at depths of less than 2 kilometres that is not being exploited, he says. “Certainly, we have the knowledge, experience and technology to exploit gold from 4 kilometres deep on up. And the rest of the world continues to mine deeper for all of its gold.”
Alix at Ashhurst Africa says that South Africa is still able to attract miners able to take on the financial burden and operational challenges of deep mines. He sees some hope in the announcement by the South African Mineral Resources and Energy Minister in early February that the mining industry will be allowed to generate electricity for its own use, meaning that miners will no longer depend on unreliable supply from state-owned Eskom.
The minister also pledged to set up a power generation company outside Eskom.
- “This could pave the way for the use of renewable energy to power mining activities,” Alix says.
- “The government could also work towards creating a more supportive environment for renewable energy projects.”
- The chief executive of Minerals Council South Africa has said that there is a 1,500MW pipeline of projects to produce private power.
- The council has called on the government to fast-track the necessary legislation to turn that into supply.
Bottom Line: South Africa urgently needs to diversify its power generation capabilities if its gold industry is to have a future.