Proposed mining code changes in Africa ‘will chase investors away’
MINING code changes proposed by a number of African countries will deter further investment on the continent, according to Randgold Resources CE Mark Bristow.
Speaking at the Mining Indaba in Cape Town on Tuesday, Mr Bristow said with gold exploration and mining shifting from the developed countries to the world’s emerging prospective regions, Africa had to compete for investment with South America, Asia, the Pacific Rim, Eastern Europe and Russia.
While Africa had the advantage of great mineral wealth, its competitors generally had better infrastructures, greater skills pools and more sophisticated economies.
Mr Bristow said in the countries where Randgold had operations — Mali, Côte d’Ivoire and the Democratic Republic of Congo — the present mining codes returned a substantial slice of the net revenue pie to the state in spite of the fact that Randgold had funded the entire discovery and development cost and carried all the risks.
"The host country is already a significant, if not the main, beneficiary of its mining activities. That is why it is disturbing that there is a growing tendency among the sub-Saharan mining countries to want more without giving anything back. Even a moderate change in their current codes will diminish these countries’ ability to compete for direct fixed investment or to encourage reinvestment," Mr Bristow said.
He went on to say there was a much better way for these countries to get more from their mining industries, and that was to participate positively in value creation.
"As we’ve seen only too often in the mining industry, mergers and acquisitions hardly ever deliver value to shareholders, let alone other stakeholders.
"Real value, as I believe Randgold has demonstrated over the years, is created by the discovery of multimillion ounce gold deposits and their development into profitable mines. Governments’ role in this should be firstly to provide a stable, business-friendly regime that will attract — or at least not drive away — investors, and then to partner the mining company in the development cycle, helping to drive the project up the value curve and sharing fairly in its proceeds," Mr Bristow said.
More in this section
- Lonmin expects cash costs to stay below guidance
- Lonmin consultations ‘positive and realistic’
- New deal aims to stem mine job cuts
- Mining industry job plan targets platinum as Reserve Bank reserve asset
- Assore pays final dividend despite tough year
- Eskom wants compensation if Optimum cannot supply coal