Investing in African Mining Requires a Long Term Perspective

An opinion piece by Ms Dawn Mokhobo, Chairperson of Wesizwe Platinum Limited

Dawn Mokhobo

At this year´s Mining Indaba which ended this week, the focus of debate was firmly on finding ways to encourage the global mining sector to continue to invest not just in South Africa, but across the African continent as a whole. This call to action came against a backdrop of difficult sectoral challenges and a considerable amount of recent turmoil for the mining industry in this country over the past year, still reeling from the impact of plummeting resource prices, crippling strike action and the consequences of the Marikana disaster. However, when the Minister of Mineral Resources, Susan Shabangu, urged all parties to work together to ensure that the mining sector becomes a destination of choice for overseas investment, it rang a particularly pertinent and timeous note.

As Chairperson of Wesizwe Platinum Limited, I represent a unique Chinese/South African mining joint venture that this month announced the confirmation of a US$ 650 million loan from the China Development Bank for the development of its Bakubung Platinum Mine project, located in the Western Limb of the Bushveld Complex, close to Rustenburg. The confirmation of this significant new funding arrangement for Wesizwe´s flagship project represents the first of several important milestones to be reached and announced this year and demonstrates the level of confidence in the project, and in the future of the South African mining industry, on the part of our Chinese shareholders, Jinchuan and the China-Africa Development Fund. This is not only good news for Wesizwe, as a company with a firm intent to become a significant mid-tier precious metals producer, but it also sends a positive signal to the country´s mining industry as a whole during what is undoubtedly a challenging period of time in its history.

The Minister´s reaffirmation of the country's attitude and policy towards nationalisation not being an option for South Africa, also sends a positive and clear message to other global investors who may be considering the country as a mining sector investment destination. The reality is that if the mining sector is to re-emerge from the recent global and localised crises, and instill and attract investor confidence once again on a major scale, then the private sector needs to feel that the country is a viable and safe long-term investment destination and one that is fully supported by government policy and developmental will. Continuing debate around nationalisation in the mining sector serves only to create further uncertainty in global markets that are already keeping a watchful eye on the country's socio political developments.

In the same vein, we take cognizance that Africa is in competition with Asia, South America, Eastern Europe, Russia and other investment destinations, that being the case, Africa should not be faulted as it attempts to ensure that the entire value creation process benefits Africa and specifically the host nations. However, processes leading to the adoption of such policy changes as inj the proposed MPRDA, should substantively lead to certainty within the sector. The assurances given by the Minister that all stakeholders will still be consulted, and further that the proposed changes are not cast in stone, are very much welcome.

Keynote speakers at this year´s Mining Indaba also reminded delegates and South African citizens as a whole just how much the country owed its economic development success, and its international business standing to date, to the mining sector. In fact, as Cynthia Carroll reminded delegates, it contributes 9,2% of the country´s GDP, with millions of its citizens relying on employment in the mining sector. The Government's National Development Plan relies upon the mining sector to play its part in unlocking opportunities for the country and its people, and to practically contribute to the achievement of the Plan's 2030 vision for the future of South Africa as a global economic player. As a new entrant to the country's mining sector, Wesizwe Platinum is directly heeding this strategic call to action on the part of Government and sees its investment in South Africa as a long-term commitment and one that has the potential to deliver benefits, not only to the sector as a whole, but also to the local community around its flagship project.

Minister Shabangu also highlighted Government´s concern on the mining sector´s focus on short-term gains as opposed to supporting the long-term prospects of sustainability in the sector, citing that such practices are not in the interests of any stakeholder group. As a new entrant to South Africa´s platinum mining sector, and as a company choosing to invest and build in the development of a new project, ours is very much a medium to long-term prospect. However, although our Bakubung Platinum Mine is only scheduled to be commissioned in 2018 and with full production anticipated in 2023, we recognise the need to invest today in the essential skills development and training resources needed for the future. We recognise that if South Africa´s mining industry is to maintain its position on the global economic stage, that investment in specialist skills training and development is critical. The country currently has a real and significant challenge that needs to be urgently addressed in terms of the shortage of key skills in the domestic marketplace, particularly in the areas of middle management, engineering and key artisan skills. South Africa continues to lose these skills at a dramatic rate and is not replacing them efficiently or fast enough. Companies such as Wesizwe are helping to combat this skills drain by investing now in the development of a new generation of mining specialists, and bringing the global expertise and experience of its Chinese partners in the development of its training programmes to ensure future needs will be met. A key example of this proactive and strategic approach is Wesizwe´s recent launch of its new Rock Drill Operator Academy which took in the first local recruits in November last year. Such initiatives look to practically develop essential new mining skills training resources for the future and undoubtedly contribute to meeting the ambitious goals set by the National Development Plan for the country as a whole.

Minister Shabangu concluded her Mining Indaba keynote address by saying to delegates that "When you invest in Africa you are investing in the future."

With its recent major investment into the country´s platinum sector, and its long-term commitment to the development of its flagship project in South Africa, Wesizwe has achieved both of these goals - it has made its first investment on the African continent and is investing with confidence in its future. Its Bakubung Platinum Mine is the first major project, together with its investment interest in neighbouring Projects 1 and 3 of Maseve Investments in partnership with Platinum Group Metals (RSA) Ltd, but as a company we will continue to look at other potentially good opportunities that may emerge.

Despite the challenges that undoubtedly remain in the short term for the country´s platinum and mining sector as a whole, we firmly believe that there is an upside prospect for the sector in the medium to long-term. In the case of Wesizwe and our investment in the Bakubung Platinum Mine project, we recognise that we are looking to mine one of the last remaining non-mined ore bodies and, as a result, that necessitates a long project lead-time. There is no other stand-alone mine being built in the country at this point in time and all strategic partners are focused on making it a success story for the sector. The fact that global investors are still investing in projects such as ours, when perhaps others in the marketplace are questioning whether Africa is still a sound investment destination in the short-term, supports the level of excitement and interest that such projects are capable of generating. We believe it is possible to build a resurgent and resilient mining sector in South Africa and one that is indeed capable of fulfilling its future potential.