Mining giants cut back on new projects

Xolile Bhengu

Xolile Bhengu

Mineral prices are booming, yet South Africa hasn't seen any gold rush in the form of foreign direct investment from resource multinationals. There were so few new mining projects initiated last year that the Chamber of Mines asked if an "investment strike" was under way.

A better understanding of why resource multinationals are focusing on other countries will hopefully emerge next week at a minerals and energy department indaba where government officials will talk to mining industry and labour representatives. The meeting is part of government's Accelerated and Shared Growth Initiative of South Africa (AsgiSA) initiative.

In her recent budget speech, Minerals and Energy Minister Buyelwa Sonjica indicated she believed there had been an investment strike. Growth in mineral sales had not been matched with any "meaningful fixed capital investment" compared to other mining countries. But Sonjica noted this year had seen a marked improvement.

A small uptick in mining production was reported by Statistics South Africa yesterday when it released its data for April. Total mining production increased a fraction (0,6percent) from the same month last year. But this increase was thanks to base metals. Gold production fell 8,2percent from April last year while platinum group metal production was down 4,2percent.

Gold demand, meanwhile, increased 31percent last year according to the World Gold Council.