Bad policy kills mining in South Africa

South African mining veteran Duncan Wanblad on Wednesday lamented the country’s foregone investment in mining, as gold prices surged past $4,000 an ounce — a record high driven by expectations of lower interest rates and safe-haven demand.

Addressing the Johannesburg Mining Indaba conference, Anglo American Plc CEO Duncan Wanblad, whose company exited South Africa’s gold mining sector in 2009, said the country’s mining potential was under-explored “due to unsupportive policy for exploration in the last 20-odd years”.

“That’s a very important part of a mining life cycle. The data will show you that it takes about 17 years from the time that you find the deposit until the time that you get it permitted and ramped up into full production,” Wanblad said.

“It’s a generation of mines that have been foregone,” he added.

On Wednesday, the gold price vaulted above $4,000 an ounce, a new record in a rally driven by expectations of lower interest rates and safe-haven demand, just as mining executives gathered at the Johannesburg conference to discuss the industry’s prospects.

The record revived memories of a visit 26 years ago by South African mining executive Bobby Godsell to Washington and London to lobby the IMF and Britain against a gold sell-off, in a desperate bid to stop prices falling further below $260 an ounce.

At the time, South Africa was a top three gold producer in the world, its output averaging 400 metric tons annually. Its output has fallen from 1,000 metric tons in 1970, when the country was the leading global producer, to 90 metric tons last year.

Today, South Africa’s old, deep shafts are more expensive to run, compared to rivals in Africa, Australia, Canada and South America.

Added to this, South African mining executives have said infrastructure challenges, policy uncertainty and labour unrest are holding back investment into exploration and mine development in the country.

Top South African gold miners Gold Fields, founded by Cecil Rhodes in 1887, Harmony Gold and Anglo’s former gold unit, which became AngloGold Ashanti in 2004, have all acquired assets elsewhere in Africa, Australia and the Americas.

• Reporting by Nelson Banya