CAPE TOWN (miningweekly.com) – The right conditions will enable mining companies to deliver inclusive growth and meet the expectations of stakeholders, as well as deliver superior returns to shareholders, South32 president and COO Africa Mike Fraser said on Monday.

In delivering a forceful address at the Investing in African Mining Indaba, Fraser reinforced mining’s might but emphasised that it is absolutely essential it is backed by a supportive legislative, regulatory and administrative environment to realise its full potential.

“We believe that South Africa’s mining industry still has the potential to grow. The resources are here and the challenge is to work together to create an environment where the minerals that are underground are converted into wealth above ground and thereby create shared value for all,” he told the conference that is being attended by Creamer Media’s Mining Weekly Online.

Creating shared value through effective collaboration is achievable in his view on the basis of mining still representing a significant vehicle for driving inclusive growth.

But to do this, South Africa must become globally competitive through the introduction of an environment conducive to investment.

Mining already provides a quarter of South Africa’s exports and nearly half of its foreign currency earnings come from the mining sector, which enables the country’s participation in global trade.

Yet the competitiveness remains legislatively challenged and costs have, for some time, been rising above inflation, which is rendering the country’s high-quality resources less accessible.

He sees improving productivity as being critical to ensuring the creation of shared value and its lack as one reason why South Africa’s ranking as a mining investment destination does not equate to the country’s mineral wealth.

“I won’t pretend that the answers are simple but I will say that solutions can only be found through better collaboration and enhanced trust between key stakeholders in the industry.

“If we don’t get on the same playing field and face the same goal, then regardless of the country’s natural endowments, South Africa’s mining industry is at risk of not realising its potential,” Fraser warned.

On the positive side, he expressed the firm belief that South Africa is capable of pulling together, citing as an example the collaborative state of the response to the threat of credit downgrading.

“The question is can we bring the same mindset to bear on the mining industry. I believe we can. We should be able to come together to position South Africa as an attractive mining jurisdiction in the global resources sector,” he added.

However, Fraser cautioned against a repeat of the Mining Phakisa, where he said stakeholders had failed to come together cohesively, resulting in the intended outcomes not being delivered.

Although no more than most sectors, he viewed mining as being particularly sensitive to policy and regulatory certainty owing to the significant upfront capital investment required ahead of long-term payback periods.

He cited policy stability as being key and how a country can assist in mitigating risk and advance investment attractiveness.

On the flipside, policy instability had the potential to bring about the exact opposite effect and pointed disappointedly to the legislative flux in South Africa's minerals sector as impacting on investor confidence.

Open and transparent dialogue with key stakeholders would be required to show that changes can be made with minimum impact.

“At South32, we understand that in creating shared value where we operate, we are better placed to maximise returns.

“Consequently, South32 has a commitment to make a difference to developing natural resources so as to improve people’s lives for generations to come,” he said.

He said that the triple-listed company active in Australia, Southern Africa and South America fully appreciated that being a responsible corporate citizen and supporting South Africa’s transformation agenda meant going beyond compliance and addressing black economic empowerment and transformation in an holistic way.

As such, he expressed the company’s commitment to increasing the representation of black management and skilled black employees, finding ways to increase the value of business done with black suppliers and facilitating opportunities for black entrepreneurs to do business with it.

Last year, South32 launched a portal to allow small and medium-seized enterprises to register business opportunities with both the company and its suppliers.

To date, more than 5 000 active companies had registered on the portal.

On opening, these centres average 20 to 30 businesses using these facilities each day.

In Mozambique, nearly 10% of Mozal’s primary aluminium is now beneficiated in Mozambique at a factory alongside the smelter in Maputo.

Aluminium rod is now sold within Mozambique and exported to six other African countries.

This facility employs 250 mainly Mozambican workers and supports another 1 000 jobs indirectly in the supply chain.

Recently, its South African coal business awarded a core mining contract to a 100% black women-owned mining company.

“These few examples illustrate what is possible and we collaborate and we recognise the value that scale can bring to the transformation agenda in South Africa.

“But for us to continue to capitalise the benefits that mining can bring, governments and the mining industry need to collaborate in the policy and legislative environment, for mining that is supportive of the betterment of the people," Fraser said.

Regarding the finalisation of South Africa’s Minerals and Petroleum Resources Development Act Amendment Bill through a collaborative process, he expressed the hope that the changes would reflect stakeholder input and that finalisation would be brought about as soon as possible to enhance certainty and confidence in the industry’s regulatory framework.

“There also remains much more to be done to manage the revision of the Mining Charter. There are provisions in this mining charter that many companies would struggle to meet while remaining globally competitive.

“To build a competitive, sustainable and inclusive mining industry, it is absolutely imperative that we approach this to ensure that changes result through proper collaboration and consultation by all stakeholders,” he added.