Scielo RSS <![CDATA[Journal of the Southern African Institute of Mining and Metallurgy]]> http://www.scielo.org.za/rss.php?pid=0038-223X20110007&lang=en vol. 111 num. 7 lang. en <![CDATA[SciELO Logo]]> http://www.scielo.org.za/img/en/fbpelogp.gif http://www.scielo.org.za <![CDATA[<b>International Interaction</b>]]> http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S0038-223X2011000700001&lng=en&nrm=iso&tlng=en <![CDATA[<b>Milestone</b>]]> http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S0038-223X2011000700002&lng=en&nrm=iso&tlng=en <![CDATA[<b>An investigation of the potential impact of the new South African Mineral and Petroleum Resources Royalty Act</b>]]> http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S0038-223X2011000700003&lng=en&nrm=iso&tlng=en The new mineral royalty regime for South Africa was signed into law in November 2008, with its main objective being to compensate the State for the depletion of public minerals through a royalty charge payable from 1 March 2010. The aims of this paper are to establish the potential impact of mining royalties on State revenues, industry affordability, and explore whether the dual formula system is likely to encourage miners to become refiners. It also measures the royalty dispensation against economists' tax standards in an attempt to make a judgement on the 'equity' of the new system. This paper argues that most stakeholders should be comfortable with most of the requirements of the Act for most of the time. However, the new regime is unlikely to motivate miners to become refiners, as the benefit of the reduced rate on refined minerals appears to be insufficient to justify the additional costs to refine the mineral resource to the prescribed states of beneficiation. <![CDATA[<strong>Mining fiscal environment in the SADC</strong>: <strong>status after harmonization attempts</strong>]]> http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S0038-223X2011000700004&lng=en&nrm=iso&tlng=en The Southern African Development Community (SADC) aims to harmonize mineral policies and regulatory regimes in the minerals sector. This paper provides a review of the progress made towards harmonization of mineral regimes in the region. It singles out only the mining fiscal environment, as this is normally one of the key issues of interest to potential investors as well as the host state. Indications are that the region is slowly progressing towards a more harmonized approach, and there is evidence that the 'race to the bottom' has been prevented, which is the basis for an integrated mineral sector that the region aspires to. <![CDATA[<b>Empirical correlation of mineral commodity prices with exchange-traded mining stock prices</b>]]> http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S0038-223X2011000700005&lng=en&nrm=iso&tlng=en Mineral commodity prices comprise one of the key criteria in the selection of mining stocks. We contend that of the three principal elements of mineral commodity prices, spot price, forward price and long-term price, one has a greater impact on the share valuation processes used by investors. This research paper examines the extent to which each of these elements influences the valuation process. The intention is to provide investors in mining stocks with a greater understanding of how fluctuations of commodity prices over time affect the prices of the mining stocks they hold, or intend to sell or buy. Three mineral commodities, gold, silver, and copper, were used as case studies, since market data on these commodities is readily available in the public domain. Nine market indices covering all three mineral commodities were selected. These are based on clearly defined criteria with the intention of eliminating ambiguity and to test for correlation with the three sets of mineral commodity prices. Nine mining companies, which were not the primary drivers of the relevant indices employed in the study, were used to validate the results obtained from the indices in order to avoid duplication of the same correlation during cross-checking. Each commodity price was adjusted for operating costs. For each market index, an average operating cost was calculated from the companies comprising its basket, while each company's annual operating costs were used for the stocks of the individual companies examined. The data was collected for the period January 2004 to October 2010. This period was further split up into three sub-periods to account for the Global Financial Crisis (GFC) period that started in mid-2008. We conclude that mining stock prices are correlated with mineral commodity prices, but with spot and forward prices exhibiting stronger correlations than long-term price. This finding should be useful for evaluation purposes. Where cash flow methodologies such as discounted cash flow or earnings per share are used to value ordinary shares and commodity prices are required to estimate future cash flows, the findings suggest that spot prices should be used as opposed to long-term prices. The work reported in this paper is part of a current MSc research study at the University of the Witwatersrand. <![CDATA[<b>Threats to the South African minerals sector : an independent view on the investment environment for mining</b>]]> http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S0038-223X2011000700006&lng=en&nrm=iso&tlng=en This article offers a personal and independent view on the threats to the sustainability of the South African minerals industry. It argues that if the six identified threats of insufficient spending on research and development, general standard of education, nationalization, inadequate infrastructure, Aids prevalence and labour inefficiency are not acted upon as a matter of urgency, the future of the mining industry, along with its important contribution to the economy, is at risk. <![CDATA[<b>A conceptual approach to evaluating the political economics of mining in Africa and the sector's contribution to economic diversification</b>]]> http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S0038-223X2011000700007&lng=en&nrm=iso&tlng=en After the global financial crisis of 2008, African mining is entering a new phase of development. The rapid withdrawal of emerging market funding from the critical exploration and development industries provided a hiatus in funding, a gap which was quickly filled by Chinese and other Asian investors. While the continent is still economically dependent on its extractive industries, the prevalence of Dutch Disease has undermined Africa's ability to benefit fully from its mining, oil, and gas industries. While the extractive industries are closely related to many of the more fragile and failed states in Africa, it is equally true that the strongest states in Africa have mining-based economies. This paper explores the possible linkages between mining, strong and weak political economies, and poverty in Africa. It draws the conclusion that neither Dutch Disease nor Resource Course is a given in resource-endowed countries, and that it can be avoided if the mining economies in these countries are actively integrated into their respective broader economies and used to foster economic diversification. The author asserts that given the capacity constraints of many African governments, it is contingent on mining companies to become integrally involved in catalysing diversification around their infrastructure and supply chains. <![CDATA[<b>The BRICs and South Africa as the Gateway to Africa</b>]]> http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S0038-223X2011000700008&lng=en&nrm=iso&tlng=en After the global financial crisis of 2008, African mining is entering a new phase of development. The rapid withdrawal of emerging market funding from the critical exploration and development industries provided a hiatus in funding, a gap which was quickly filled by Chinese and other Asian investors. While the continent is still economically dependent on its extractive industries, the prevalence of Dutch Disease has undermined Africa's ability to benefit fully from its mining, oil, and gas industries. While the extractive industries are closely related to many of the more fragile and failed states in Africa, it is equally true that the strongest states in Africa have mining-based economies. This paper explores the possible linkages between mining, strong and weak political economies, and poverty in Africa. It draws the conclusion that neither Dutch Disease nor Resource Course is a given in resource-endowed countries, and that it can be avoided if the mining economies in these countries are actively integrated into their respective broader economies and used to foster economic diversification. The author asserts that given the capacity constraints of many African governments, it is contingent on mining companies to become integrally involved in catalysing diversification around their infrastructure and supply chains. <![CDATA[<b>Mineral supply from Africa</b>: <b>China's investment inroads into the African mineral resource sector</b>]]> http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S0038-223X2011000700009&lng=en&nrm=iso&tlng=en After the global financial crisis of 2008, African mining is entering a new phase of development. The rapid withdrawal of emerging market funding from the critical exploration and development industries provided a hiatus in funding, a gap which was quickly filled by Chinese and other Asian investors. While the continent is still economically dependent on its extractive industries, the prevalence of Dutch Disease has undermined Africa's ability to benefit fully from its mining, oil, and gas industries. While the extractive industries are closely related to many of the more fragile and failed states in Africa, it is equally true that the strongest states in Africa have mining-based economies. This paper explores the possible linkages between mining, strong and weak political economies, and poverty in Africa. It draws the conclusion that neither Dutch Disease nor Resource Course is a given in resource-endowed countries, and that it can be avoided if the mining economies in these countries are actively integrated into their respective broader economies and used to foster economic diversification. The author asserts that given the capacity constraints of many African governments, it is contingent on mining companies to become integrally involved in catalysing diversification around their infrastructure and supply chains. <![CDATA[<b>Aspects of Chinese investment in the African resources sector</b>]]> http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S0038-223X2011000700010&lng=en&nrm=iso&tlng=en After the global financial crisis of 2008, African mining is entering a new phase of development. The rapid withdrawal of emerging market funding from the critical exploration and development industries provided a hiatus in funding, a gap which was quickly filled by Chinese and other Asian investors. While the continent is still economically dependent on its extractive industries, the prevalence of Dutch Disease has undermined Africa's ability to benefit fully from its mining, oil, and gas industries. While the extractive industries are closely related to many of the more fragile and failed states in Africa, it is equally true that the strongest states in Africa have mining-based economies. This paper explores the possible linkages between mining, strong and weak political economies, and poverty in Africa. It draws the conclusion that neither Dutch Disease nor Resource Course is a given in resource-endowed countries, and that it can be avoided if the mining economies in these countries are actively integrated into their respective broader economies and used to foster economic diversification. The author asserts that given the capacity constraints of many African governments, it is contingent on mining companies to become integrally involved in catalysing diversification around their infrastructure and supply chains. <![CDATA[<b>Subject concepts and issue outline</b>]]> http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S0038-223X2011000700011&lng=en&nrm=iso&tlng=en After the global financial crisis of 2008, African mining is entering a new phase of development. The rapid withdrawal of emerging market funding from the critical exploration and development industries provided a hiatus in funding, a gap which was quickly filled by Chinese and other Asian investors. While the continent is still economically dependent on its extractive industries, the prevalence of Dutch Disease has undermined Africa's ability to benefit fully from its mining, oil, and gas industries. While the extractive industries are closely related to many of the more fragile and failed states in Africa, it is equally true that the strongest states in Africa have mining-based economies. This paper explores the possible linkages between mining, strong and weak political economies, and poverty in Africa. It draws the conclusion that neither Dutch Disease nor Resource Course is a given in resource-endowed countries, and that it can be avoided if the mining economies in these countries are actively integrated into their respective broader economies and used to foster economic diversification. The author asserts that given the capacity constraints of many African governments, it is contingent on mining companies to become integrally involved in catalysing diversification around their infrastructure and supply chains. <![CDATA[<b>International best practice and resource nationalism</b>: <b>the International Bar Association's model mine development agreement<sup>1</sup></b>]]> http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S0038-223X2011000700012&lng=en&nrm=iso&tlng=en After the global financial crisis of 2008, African mining is entering a new phase of development. The rapid withdrawal of emerging market funding from the critical exploration and development industries provided a hiatus in funding, a gap which was quickly filled by Chinese and other Asian investors. While the continent is still economically dependent on its extractive industries, the prevalence of Dutch Disease has undermined Africa's ability to benefit fully from its mining, oil, and gas industries. While the extractive industries are closely related to many of the more fragile and failed states in Africa, it is equally true that the strongest states in Africa have mining-based economies. This paper explores the possible linkages between mining, strong and weak political economies, and poverty in Africa. It draws the conclusion that neither Dutch Disease nor Resource Course is a given in resource-endowed countries, and that it can be avoided if the mining economies in these countries are actively integrated into their respective broader economies and used to foster economic diversification. The author asserts that given the capacity constraints of many African governments, it is contingent on mining companies to become integrally involved in catalysing diversification around their infrastructure and supply chains. <![CDATA[<b>The politics of large-scale mining in Africa</b>: <b>domestic policy, donors, and global economic processes</b>]]> http://www.scielo.org.za/scielo.php?script=sci_arttext&pid=S0038-223X2011000700013&lng=en&nrm=iso&tlng=en After the global financial crisis of 2008, African mining is entering a new phase of development. The rapid withdrawal of emerging market funding from the critical exploration and development industries provided a hiatus in funding, a gap which was quickly filled by Chinese and other Asian investors. While the continent is still economically dependent on its extractive industries, the prevalence of Dutch Disease has undermined Africa's ability to benefit fully from its mining, oil, and gas industries. While the extractive industries are closely related to many of the more fragile and failed states in Africa, it is equally true that the strongest states in Africa have mining-based economies. This paper explores the possible linkages between mining, strong and weak political economies, and poverty in Africa. It draws the conclusion that neither Dutch Disease nor Resource Course is a given in resource-endowed countries, and that it can be avoided if the mining economies in these countries are actively integrated into their respective broader economies and used to foster economic diversification. The author asserts that given the capacity constraints of many African governments, it is contingent on mining companies to become integrally involved in catalysing diversification around their infrastructure and supply chains.