Investors have lost faith in South Africa\u2019s government and have halted investment despite a wealth of opportunities, the head of the country\u2019s biggest employer in the crucial mining industry said.<\/p>\n
More than 200 days of power cuts last year and blackouts every day so far in 2023 have dented confidence, as has the poor performance of the state transport utility and a plethora of other problems. Pledges to enact reforms to spur the economy have come to little, said Neal Froneman, chief executive officer at Sibanye Stillwater Ltd.<\/p>\n
\u201cThere is much more that we can invest in and the rest of South African businesses can invest in if the climate was different, if we had power if we had clear policies and if it was more environmentally friendly,\u201d Froneman said in an interview last week. \u201cBusiness investment in South Africa is on strike until things improve<\/strong>.\u201d<\/p>\n Corruption, crime and mixed messages from government ministers as to how quickly the country will transition to cleaner energy have also drawn criticism from a range of business leaders. Investment has been confined mainly to keeping existing businesses running rather than expanding their operations.<\/p>\n Mining accounted for 4% of the gross domestic product in 2022, employed about 476,000 people and generated R878 billion in exports, according to the Minerals Council South Africa, a lobby group representing most mining groups operating in the country.<\/p>\n Largely as a result of the problems Froneman laid out, economic growth is anaemic, with economists surveyed by Bloomberg forecasting an expansion of 1.2% this year. Unemployment at 32.9% is among the highest across more than 80 countries tracked by Bloomberg.<\/p>\n \u201cInvestors are very negatively disposed toward South Africa,\u201d Froneman said. \u201cThey\u2019ve lost faith and they\u2019ve lost trust in the government<\/strong>.\u201d<\/p>\n Vincent Magwenya, spokesperson for South African President Cyril Ramaphosa, referred queries to the Department of Mineral Resources and Energy.<\/p>\n While the department didn\u2019t immediately respond to queries, Gwede Mantashe, the mining and energy minister, acknowledged the impact that the blackouts and transport issues are having on the industry in a speech to the Investing in African Mining Indaba conference in Cape Town on Monday (6 February).<\/p>\n Mining companies, among the nation\u2019s biggest electricity users, are scaling down some activities. The outages probably cut South Africa\u2019s output for platinum-group metals by 10% in 2022, and this year, production could fall by a fifth, Froneman said.<\/p>\n South Africa accounts for about 70% of the world\u2019s platinum output and almost 40% of all palladium, metals which are used in auto-catalysts that curb vehicle emissions.<\/p>\n Sibanye, which was carved out of Gold Fields Ltd. in 2013, employs about 85,000 people, including those working at its US operations.<\/p>\n Since its formation, Froneman has diversified the company by buying platinum, nickel and lithium operations in Zimbabwe, Europe, and the US mining companies are now at risk of closing some unprofitable shafts in South Africa, which would lead to job cuts, he warned.<\/p>\n \u201cSome shafts are very marginal and I think load-shedding could tip them over,\u201d the CEO said, using local terminology for blackouts.<\/p>\n The challenges at the national power utility, Eskom, and state-owned rail and logistics company, Transnet, are unlikely to be resolved soon, he said. Coal arrivals at the main export port collapsed to a 30-year low last year because of Transnet\u2019s poor performance and have fallen even further this year, according to people familiar with the situation.<\/p>\n The Minerals Council in December demanded that Transnet management be removed, according to a report by News24, which cited a letter sent by the group to the company\u2019s chairman. Transnet and the Minerals Council have declined to comment on the letter.<\/p>\n \u201cAll the trajectories are down,\u201d Froneman said, referring to Transnet\u2019s faltering performance \u201cYou don\u2019t see anything turning. I completely support the Minerals Council\u2019s approach.\u201d<\/p>\n The Sibanye CEO\u2019s concerns were echoed by Duncan Wanblad, the chief executive officer of Anglo American Plc, in a speech at the Mining Indaba in Cape Town. Anglo owns iron ore, platinum and diamond operations in South Africa.<\/p>\n \u201cCorruption \u2013 and the crime that stems from it \u2014 are a cancer eating away at the entire economy on a horrific scale,\u201d he said. Progress made in energy provision was so late in the day that the system had already failed,\u201d he said.<\/p>\n The poor performance of the economy could cost the ruling African National Congress power in next year\u2019s general elections if it continues to \u201cact in the party\u2019s interest instead of the national interest,\u201d Froneman said.<\/p>\n \u201cThey engage but they are unable to implement any of the things that are necessary to change this,\u201d he said. \u201cThey will tell us what we want to hear but I don\u2019t believe they are sincere in making a difference.\u201d<\/p>\n
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