This report presents the results of the Fraser Institute’s 2022 annual survey of mining and exploration companies which includes mining in South Africa.

The survey is an attempt to assess how mineral endowments and public policy factors such as taxation and regulatory uncertainty affect exploration investment.

The survey was circulated electronically to approximately 1,966 individuals between August 23rd to December 30th, 2022. Survey responses have been tallied to rank provinces, states, and countries according to the extent that public policy factors encourage or discourage mining investment.

We received a total of 180 responses for the survey, providing sufficient data to evaluate 62 jurisdictions.

By way of comparison, we evaluated 84 jurisdictions in 2021, 77 in 2020, 76 in 2019, and 83 in 2018. The number of jurisdictions that can be included in the study tends to wax and wane as the mining sector grows or shrinks due to commodity prices and sectoral factors.

This year’s survey includes an analysis of permit times, as did last year’s survey.

The Investment Attractiveness Index takes both mineral and policy perception into consideration

An overall Investment Attractiveness Index is constructed by combining the Best Practices Mineral Potential index, which rates regions based on their geologic attractiveness, and the Policy Perception Index, a composite index that measures the effects of government policy on attitudes toward exploration investment.

While it is useful to measure the attractiveness of a jurisdiction based on policy factors such as onerous regulations, taxation levels, the quality of infrastructure, and the other policy related questions that respondents answered, the Policy Perception Index alone does not recognize the fact that investment decisions are often to a considerable extent based on the pure mineral potential of a jurisdiction.

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Indeed, as discussed below, respondents consistently indicate that approximately 40% of their investment decision is determined by policy factors.

The top

The top jurisdiction in the world for investment based on the Investment Attractiveness Index is Nevada, which moved up from 3^rd place in 2021. Western Australia, which topped the ranking last year, ranked 2^nd this year.

Saskatchewan continues to be on the podium, dropping slightly from a rank of 2^nd in 2021 to 3^rd this year. Rounding out the top 10 are Newfoundland & Labrador, Colorado, Northern Territory, Arizona, Quebec, South Australia, and Botswana. The United States, Canada, and Australia each have three jurisdictions in this year’s top 10, followed by Africa (1).

The bottom

When considering both policy and mineral potential in the Investment Attractiveness Index, Zimbabwe ranks as the least attractive jurisdiction in the world for investment followed by Mozambique, South Sudan, and Angola.

Also, in the bottom 10 (beginning with the least attractive for investment) are Zambia, South Africa, China, the Democratic Republic of Congo, Papua New Guinea, and Tanzania. Africa is the region with the most jurisdictions (8) in the bottom 10. Asia and Oceania both have one jurisdiction each in the bottom 10.

The Minerals Council is concerned that mining in South Africa remains poorly rated as a mining investment jurisdiction in the latest Fraser Institute Annual Survey of Mining Companies 2022.

In the survey mining in South Africa is, for the second consecutive year, ranked in the bottom ten global mining jurisdictions, placed 57 out of 62 in the overall Investment Attractiveness Index compared to last year’s position of 75 out of 84 jurisdictions. Last year was the first time the country ranked in the bottom ten.

The survey captures the mining industry’s perceptions of the investment potential of global mining jurisdictions based on mineral potential and government policies. The Fraser Institute uses 15 standard questions on policy factors, which are rated on a scale of one to five to determine whether they encourage or discourage investment in a mining jurisdiction.

Governments can assess or validate the impact of their policies or use the survey to improve mining related policies to attract more investment.

Mining in South Africa is ranked lowly in the Investment Attractiveness Index, which is weighted 60% by mineral potential and 40% by policy perceptions. In 2020 and 2019, mining in South Africa ranked 60 out of 77 jurisdictions and 40 out of 76 respectively.

In the Policy Perception Index, South Africa slipped to 53 out of 62 from 65 out of 84 jurisdictions the year before. In the Mineral Attractiveness Index, it ranked 41 out of 47 jurisdictions compared to 77 out of 84 a year earlier.

The Survey noted mining in South Africa slipped sharply in its policy score because of concerns about infrastructural constraints (electricity and rail) and the availability of skilled labour.

Respondents flagged regulatory duplication and worries about the administration and enforcement of existing regulations to also be a deterrent to investment.

“The Minerals Council is due to meet the Department of Mineral Resources and Energy about the surveys and to engage on each of the 15 areas of the survey to address the underlying causes and propose potential solutions,” says Roger Baxter, CEO of the Council.

“It is disappointing that South Africa remains poorly perceived as a global mining jurisdiction, but there are fundamental problems in our country that need to be addressed. The Minerals Council continues to work with the DMRE, other government ministries, the Presidency and business organisations to create an investment-friendly environment to encourage sustainable, inclusive growth,” he says.

“There has been encouraging progress in energy reforms with the establishment of the National Electricity Crisis Committee (NECOM) and the government implementing significant reforms to enable greater private sector investment in electricity generation.

“On the rail side, the Minerals Council has been working closely with Transnet to stabilise rail operations and the Council welcomes the recent announcement by President Ramaphosa on the establishment of the National Logistics Crisis Committee (NLCC) to address the rail and ports crisis.

The Minerals Council is in talks with the government about addressing the crime and corruption challenges the sector is facing and to address the red-tape issues holding back investment in exploration and mining,” he says.

The Minerals Council has noted the DMRE has issued a request for proposals for a new cadastral system to replace its dysfunctional SAMRAD system. It is critical to have a transparent, off-the-shelf, proven, online cadastral system to encourage investment in exploration and to expedite the processing of prospecting and mining right applications.

ABOUT THE AUTHORS:

Julio Mejía is a Junior Policy Analyst at the Fraser Institute. He holds a Bachelor of Government and International Relations and a Master’s degree in International Affairs from the Externado University of Colombia, and a Master’s degree in Criminology and Criminal Justice Policy from the University of Guelph.

Prior to joining the Fraser Institute, Mejia worked as the liaison between the Colombian and the United States armies and as coordinator for international cooperation for different universities in Latin America.

His comments have appeared in the Financial Post, Halifax Chronicle Herald, Toronto Sun, and Colombia’s leading news publications, including El Tiempo and La Republica. He has been a regular guest at NTN24, WRadio, and other Spanish-language news outlets. Mejia specializes in energy policy, with a focus on the mining and petroleum industries.

Elmira Aliakbari is Director of the Centre for Natural Resource Studies at the Fraser Institute. She received a Ph.D. in Economics from the University of Guelph, and M.A. and B.S. degrees in Economics, both from the University of Tehran in Iran.

She has studied public policy involving energy and the environment for nearly eight years. Prior to joining the Fraser Institute, Ms. Aliakbari was Director of Research, Energy, Ecology and Prosperity with the Frontier Center for Public Policy.

She has presented her work at many academic conferences and has been published in the prestigious academic journal Energy Economics. Aliakbari’s research has been discussed in prominent media outlets including the Wall Street Journal, and her commentaries have appeared in major Canadian and American newspapers such as the Globe and Mail, Washington Times, National Post, and Financial Post.