Chamber of Mines outgoing president Lazarus Zim has told the organisation’s annual general meeting that real fixed investment in South Africa’s mining sector rose by 14.8% last year and 34.1% in the first six months of this year following cooperation between the government and the mining industry to reverse the trend of declining investment.

Investment in the mining sector declined by 20% in 2004 and 13.2% in 2005 in spite of the ongoing increase in commodity prices that was taking place at the same time. As a result of the downturn in investment, the government, the mining industry and labour bodies formed a task team to identify reasons for the decline and to suggest ways to reverse it.

Regulatory constraints, mostly in securing environmental and mining licences; infrastructure constraints having to do with rail, ports and water; and the volatile exchange rate were identified as the three major reasons for the decline.

Since then, the Department of Minerals and Energy has improved the processing of licence applications, while infrastructure constraints were being addressed through a forum comprising mining companies and parastatals. Furthermore, the South African Reserve Bank had been building up foreign currency reserves to combat the volatility of the rand.