Investors have lost faith in South Africa’s government and have stopped investment despite a wealth of opportunities, the head of the country’s biggest employer in the crucial mining industry said.
More than 200 days of power cuts last year and blackouts every day so far this year have dented confidence, as has the poor performance of the state transport utility and a plethora of other problems.
Pledges to enact reforms to spur the economy have come to little, Sibanye Stillwater Ltd chief executive officer Neal Froneman said.
Photo: Reuters
“There is much more that we can invest in and the rest of South African businesses can invest in if the climate was different, if we had power, if we had clear policies and if it was more environmentally friendly,” Froneman said in an interview last week. “Business investment in South Africa is on strike until things improve.”
Corruption, crime and mixed messages from government ministers as to how quickly the country is to transition to cleaner energy has also drawn criticism from a range of business leaders. Investment has been confined mainly to keeping existing businesses running rather than expanding their operations.
Mining accounted for 4 percent of GDP last year, employed about 476,000 people and generated 878 billion rands (US$49.7 billion) of exports, said Minerals Council South Africa, a lobby group representing most mining groups operating in the country.
Largely as a result of the problems Froneman laid out, economic growth is anemic with economists surveyed by Bloomberg forecasting an expansion of 1.2 percent this year.
At 32.9 percent, unemployment is among the highest across more than 80 countries tracked by Bloomberg.
“Investors are very negatively disposed toward South Africa,” Froneman said. “They’ve lost faith and they’ve lost trust in the government.”
Mining companies, among the nation’s biggest electricity users, are scaling down some activities. The outages probably cut South Africa’s output for platinum-group metals by 10 percent last year, and this year production could fall by one-fifth, Froneman said.
South Africa accounts for about 70 percent of the world’s platinum output and almost 40 percent of all palladium, metals that are used in auto-catalysts that curb vehicle emissions.
The challenges at national power utility, Eskom Holdings SOC Ltd, and state-owned rail and logistics company, Transnet SOC Ltd, are unlikely to be resolved soon, Froneman said.
Coal arrivals at the main export port collapsed to a 30-year low last year, because of Transnet’s poor performance and have fallen even further this year, people familiar with the situation said.
Minerals Council South Africa in December last year demanded that Transnet management be removed, South Africa’s News24 reported, citing a letter sent by the group to the company’s chairman.
Transnet and Minerals Council South Africa have declined to comment on the letter.
“All the trajectories are down,” Froneman said, referring to Transnet’s faltering performance. “You don’t see anything turning. I completely support the minerals council’s approach.”
His concerns were echoed by Duncan Wanblad, the chief executive officer of Anglo American PLC, in a speech at the Investing in African Mining Indaba in Cape Town, which started on Monday. Anglo owns iron ore, platinum and diamond operations in South Africa.
“Corruption — and the crime that stems from it — are a cancer eating away at the entire economy on a horrific scale,” he said. “Progress made in energy provision was so late in the day that the system had already failed.”
The poor performance of the economy could cost the ruling African National Congress power in next year’s general elections if it continues to “act in the party’s interest instead of the national interest,” Froneman said.
“They engage, but they are unable to implement any of the things that are necessary to change this,” he said. “They will tell us what we want to hear, but I don’t believe they are sincere in making a difference.”
Restaurant chain Din Tai Fung (鼎泰豐) today announced it is to close 14 stores in northern China, completely exiting the market by the end of October. Beijing Hengtaifeng Catering Co (北京恆泰豐餐飲), which operates Din Tai Fung restaurants in northern China, said its 20-year operating license expires this year. As the board was unable to reach a consensus on continuing operations, its 14 restaurants in the region are to close by Oct. 31, it said. The company apologized for the inconvenience and disappointment the news would cause among its customers, and said it would provide compensation for its workers. “We continue to be optimistic about
EXPANDING: The European Commission has contributed 5 billion euros in state aid to TSMC’s 12-inch wafer fab in Dresden, Germany, which broke ground on Tuesday Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) on Saturday said that it has received a total of NT$62.5 billion (US$1.95 billion) in subsidies from China and Japan since 2022. In the first half of this year, TSMC received NT$7.96 billion in subsidies from China and Japan after receiving about NT$47.55 billion last year and obtaining NT$7.05 billion in 2022, financial data compiled by the world’s largest contract chipmaker showed. The company, which makes about 90 percent of the world’s high-end semiconductors, said the subsidies were used to finance its investments in Kumamoto, Japan, and Nanjing, China. TSMC owns a 12-inch wafer fab in
STRATEGIC SHIFT: Diversifying away from the volatile flat-panel industry, AUO aims to boost sales contribution from non-panel business to half of total revenue by 2027 AUO Corp (友達) yesterday said it has agreed to sell its idled manufacturing facility and land in Tainan to Micron Technology Inc for NT$7.4 billion (US$231.8 million) as the company shifts strategy to reduce the impact from the boom-and-bust flat-panel display industry. The company expects to book NT$4.17 billion in disposal gains from the sale, it said in a Taiwan Stock Exchange filing. The Tainan factory produced color filters used in monitors, notebook computers and flat-panel TVs before being shut down last year, as AUO sought to optimize its asset utilization. The company has been striving to diversify and broaden its business
Micron Technology Inc has reportedly set its sights on two facilities owned by flat-panel maker AUO Corp (友達) after Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) recently clinched a deal to buy a facility and equipment from Innolux Corp (群創), another major flat-panel maker. Micron, the world’s third-largest memorychip maker, is expected to purchase two AUO plants in Tainan to expand its advanced chip packaging and testing services and high-bandwidth memory production, local media reports said. The two plants were shut down in August last year and AUO is seeking to dispose of the facilities, the reports said. They are expected to cost Micron