INSIGHT
EXPECTING INCREASED
INVESTMENT IN 2019
By Eamonn Ryan
Throughout the Jacob Zuma administration, South Africa under-performed economically not only
in its peer group of developing countries, but also at a much lower global average. Our growth rate
also under-performed our population growth rate, therefore in the past 10 years almost all South
Africans have become poorer.
L
ast year’s changes in political
leadership suggest that the South
African surface mining industry
may be moving towards a clearer operating
framework, though much uncertainty
remains, says consulting engineering and
science company SRK Consulting partner
and principal consultant Andrew van Zyl.
The past year has been a transitional
phase, and the impact of past (and to a
degree, lingering) regulatory uncertainty
has a differing impact on different
businesses; explains Van Zyl, “There is one
impact on existing businesses, one that
varies according to whether a business is a
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small, local business or a large multinational
one; and a different impact on potential
businesses.
“A South African-based operation is
typically focused on its existing business
and has fewer options. Business conditions
are what they are, and a domestic business
has no option but to make the best of the
cards dealt it – it is not going to change
its business or stop operations except in
extremis. It will consequently keep on
reinvesting in its business with a focus on
efficiencies and liquidity in an effort to
improve profitability – all the while awaiting
the return of improved market conditions.
“A large multinational, on the other
hand, has the option to divert investment
from South Africa to a more investor-
friendly or prospective jurisdiction. It
has options in multiple jurisdictions.
Its concerns are the macro-economic
issues such as regulatory environments,
portfolio composition, exchange rates and
international commodity prices. A local
quarry, for instance, is far more domestic
in its outlook, with its drivers being the
provincial economy and rand-based supply
and demand factors,” says Van Zyl.
International commodity prices in most
instances have a marginal impact on quarry
QUARRY SA | JANUARY/FEBRUARY 2019_39