The recent conference season in South Africa has seen an improvement in sentiment for African miners. Coming, as it did, with the recent election of Cyril Ramaphosa as the new president of South Africa, the mood was somewhat improved on hopes that the endemic culture of corruption can be cleared across the country.
John Meyer, mining analyst and founder of the London based nomad and broker, SP Angel, says that his experience of the event that he attended this year, was that it was ‘jam packed’ with both companies and investors that were interested in getting together to fund projects. Add to this the improved political backdrop, Meyer is hopeful that this will be the beginning of a number of new projects in the region that can now go ahead.
Despite only winning by a slim majority, the media and a broad base of political opinion, seems to be behind the plans that President Ramaphosa wants to bring about. In a speech to the South African parliament, Ramaphosa said he is confident that a new social compact can be forged to turn the country around and deal with, what he called, the injustices of the past.
His predecessor, Jacob Zuma, was widely reported to have presided over a corruption and scandal-tainted rule that saw capital flight and a highly divisive structure that pitched capital owners against the very people that made the economy work. With a breakdown of that relationship came violence, including the so-called Marikana massacre in 2014. An event that South Africa would rather forget, where mining employers engaged a heavy handed police force to come in and break up a miners’ strike which, ultimately, left 34 people dead.
Ramaphosa used his reply to debate on his State of the Nation Address to amplify his call for South Africans to unite behind efforts to revive the economy, create jobs, reduce inequality and deal with the land question.
One headwind that is now likely to be felt by companies operating in South Africa comes from the currency markets. With the change in sentiment in the country, there has been a move into the South African rand, which, John Meyer says, will have the dampening effect of lowering earnings for companies. But, if Ramaphosa is allowed to transform the country, the long-term implications will be positive.