Comment
Southern
Africa becomes
high-risk
territory
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@LeonLouw3
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P
olitics play such a critical role in
the mining industry that
it has become impossible
to ignore the deafening political
noise currently overwhelming
the southern African region.
Political, geographic, social and
environmental risks have become
crucial factors to consider when
geographic diversification becomes
part of a mining company’s future
strategy. As we enter 2018, investors
are becoming more cautious of where
they invest their money, and a lot
more concerned of how political
change will affect their investments.
Mining is a long-term commitment,
and if there is the slightest hint that
owners might lose their property in
the future through nationalisation,
or by being forced to pay excessive
tax, or give away more than half of
their companies, they will not invest.
As the southern African populace
becomes more and more vocal about
the poor quality of leadership, and
lack of service delivery, their leaders,
government representatives and
members of the opposition, intensify
the populist rhetoric. Unfortunately,
the mining industry is always the
number one target of their vehemence.
Foreign mining companies will stay
away from countries where they
are threatened, or even where they
feel threatened, and where the risks
outweigh the possible rewards. And
contrary to what some believe, the
best mineral endowment in the
world is not good enough anymore.
The southern Africa region seems
to be on the brink of entering its
version of the Arab Spring. As
risk managers raise the red flags
for South Africa, Zimbabwe, the
DRC and even Zambia, established
companies take flight, and potential
investors turn a blind eye. While
corrupt southern African leaders,
autocrats and dictators continue
feeding at the through provided by
the tax paying community and at
the expense of their citizens, the tax
pool shrinks as existing tax payers
migrate to greener pastures, and what
could have been future tax payers,
invest their capital elsewhere.
It’s time the leaders in southern
Africa, and especially South Africa,
realise that money follows stability,
predictability and where it is safe;
not affinity, geology or guilt.
Leon
JANUARY 2018 MINING MIRROR
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