By Matthew Kennard.
Wednesday was all about investment security and Africa. The conference was addressed by South African mining minister, Susan Shabangu, who made noises a lot of people in room liked. In the media conference after she promised that there would be no nationalisation of mines while she was alive: “Maybe when I’m dead – and rest assured I’m not dying next week,” she said.
Local press yesterday reported that the ANC Youth League was up in arms about this revelation. It’s spokesman Floyd Shivambu said: “We call on the minister of minerals to stop misleading investors, because these investors should also make input into the [youth league’s] discussion document on the nationalisation of mines.”
This is a big issue, not just in South Africa but all over the continent. While there is a certain optimism around the place, you sense investor trepidation about the rule of law and political instability around the continent.
James Smither, associate direct at Control Risks, a leading business risk consultancy, was dispatched to the podium to lay it out. He was optimistic, he said, but there were obviously problems. 37 of the 53 African states – or 70 percent – are considered “medium security risks”.
He said there were five main areas of concern.
1. Elections and leadership are liable to change – a third of African countries go to the polls in 2010. “Many companies have to align themselves to a clique,” he said. “If that clique changes there’s a big problem.”
2. Regulation and Red Tape is a problem with corporate taxes liable to increase with the rise in commodity prices.
3. Corruption and fraud – more scams and inconsistent enforcement of laws.
4. Infrastructure deficiencies – “the single largest constraint on private sector investment.” Oh, and power availability will be a big issue.
5. Kidnap and piracy – both on the upturn apparently.
The Featured Company Of The Day is AIM-listed Nyota Minerals because they are working in a country that is off the radar of most companies and considered a bit dodge, although it seems that might change soon. Nyota’s prospective gold operation in Ethiopia, at Tulu Kapi, only began development in September, but they reckon there could be a million ounces of gold down there.
Martin Churchouse told me: “June will be the big moment because the resource will be defined.” But what about Ethiopia, is its government corrupt? “I can honestly say we haven’t encountered anything that hasn’t been above board.” Note the double negative.
Anyway, the only way to find out was talk to the Ethiopian mining minister herself. “We were a command economy not so long ago,” said Mrs Sinknesh Ejigu. “Now we’ve opened up and we’ve shown flexibility to laws.” She pointed out that corporate tax was slashed by 10 per cent in the 1990s. There were a few more boilerplate pieties about “sustainable mining” (that’s par for the course here), but on Tulu Kapi, she said: “The project is very exciting because we haven’t seen much development in Western Ethiopia, this is the first time for gold.” And with that she left with her delegation.
Mr Churchouse says Nyota will probably be wanting to raise some money this year if all goes to plan with Tulu, he said.
On related matters: the Zimbabwean mining minister was hardballed by a piqued delegate after his speech about the joys of his country’s “security of tenure”. The Zimbabwean central bank has refused to pay its liabilities on a rash of bonds, and the government seems unable to enforce legal rulings which have adjudicated in companies favour in the country. “It might not be today,” said Mr Zwizwa on paying back the bonds. “But we are aware of our obligations.”
Frank Timis Adjective Watch:
As Frank decided to be a party pooper, I have filled the elephantine gap left by his absence at Indaba by collecting adjectives about him from his comrades in the mining industry.
Today’s five: “Legendary”; “Slightly insane”; “Brilliant”; “Life and soul“; “Strange”.
Party Of The Night: Brokerage Ambrian had their party last night but I didn’t get there in time; Anglo-American had their Gala Dinner too, but buses left at 6pm, too early. Apparently it’s quite boring anyway (if Cynthia Carroll’s speech here was anything to go by I don’t doubt it). I ended up at the Renaissance Capital (Rencap) house party. It was in some plush mansion on a residential street with an expansive view over Camps Bay, a beach here. Nothing much to report from the party apart from some nice little bits of beef on sticks and a lot of PRs trying to sell a lot of clients. I’ll give it 3 stars – it would be less if not for the strawberry mojitos, which is a good look for any party.