Xstrata chief calls for mining infrastructure investment

Enviromine

South Africa’s mining sector is unable to reach its full potential, Xstrata plc chief executive Mick Davis said in an address to the Wits Business School, because of poor mining infrastructure.

A study by Global Insight showed that the mining sector’s GDP contribution actually shrank by 1% between 2001 and 2008, one of the greatest natural resource booms in history, he added.

“Restricted and unstable energy and transport infrastructure, shortages of skilled labour - in particular engineers, geologists and artisans - and the constrained capacity within regulatory bodies to satisfy significant volumes of licensing or permitting applications have prevented our country from reaping the full benefit of the first phase of the commodities boom.,” Mr Davis said.

Mr Davis singled out underinvestment in water-related infrastructure and the county’s power crisis as two of the major inhibitors of growth.

“In the not too distant future, underinvestment in water-related infrastructure risks pitting industry against its own communities as water scarcity grows.

“But it doesn’t have to be this way. Government and a participative industry with a common vision can restore the South African minerals industry to growth, competitiveness, job creation and the ability to capture value from the ongoing ‘Super Cycle’,” he added.

Mr Davis also said that the skills shortage within the mining industry is more acute in South Africa than in most of the countries around the world, a legacy of the poor education and underinvestment in technical educational institutions.

“This issue requires a holistic approach from primary education through to the provision of bursaries and apprenticeships,” he said, adding that this was an area in which Xstrata had invested in the past eight years, providing financial support for students, funding programmes and supporting initiatives to improve school governance.

He advocated a ‘teach first’ programme in which graduates are encouraged to teach for two to three years, to entice children into the sector.

“There is nothing better in encouraging, motivating and inspiring young people to excel than great role models, which these Teach First graduates will be,” Mr Davis said.