South Africa's new leadership has started well, top mining boss says

Key Points
  • Anglo American CEO Mark Cutifani praised the new start made by South African President Cyril Ramaphosa.
  • South Africa's mining sector has foundered in recent years, despite the country being rich in coal and metal commodities.
  • Earlier this week, a South African mining industry group put off court action against new regulation in favor of negotiating with Ramaphosa.
Mujahid Safodien | AFP | Getty Images

South Africa's new President Cyril Ramaphosa has begun his tenure on the right foot with the mining sector, a chief executive has told CNBC.

"The new leadership under Mr. Ramaphosa has started very well," Anglo American CEO Mark Cutifani said Thursday. "They've reached out their hands to the mining industry and said they want to see the industry grow."

Resurrecting South Africa's mining industry is one of the long list of challenges that Ramaphosa must deal with. The country, though rich in coal, diamonds and gold — as well as being the world's leading platinum producer — has seen its mining industry founder in recent years due to high costs, low commodity prices and regulatory uncertainty, among other factors.

In 1980, it contributed 21 percent to gross domestic product — by 2016, this had shrunk to 8 percent, according to Statistics South Africa.

Ramaphosa himself has a background in mining, having established the country's powerful National Union of Mineworkers in 1982 and served on the board of platinum miner Lonmin.

He was sworn into office last week as former President Jacob Zuma stood down after days of intense political wrangling. Ramaphosa is viewed positively by the business community for his pledges to fight graft and pursue a pragmatic economic agenda.

Anglo American CEO: South Africa’s new leadership has started well

Barnaby Fletcher, senior analyst at Control Risks, told CNBC via email that Ramaphosa's "ascension to the presidency will likely be welcomed by (mining) industry players."

The new president "will seek to provide a measure of policy clarity to a sector that has struggled with uncertainty," around issues including the country's mining charter and black economic empowerment, he added.

Fletcher also said it was "likely" that that South Africa's current minister of mineral resources would be removed for his alleged links to corruption scandals associated with Zuma and the Guptas, an influential business family in South Africa.

Earlier this week, it emerged that a South African mining industry group had decided to put off court action against new regulations that included more black ownership of mines, and instead negotiate with Ramaphosa.

"As a chamber of mines and as an industry, we've agreed to defer court actions that have been in place," Cutifani said.

"From our point of view, we're very positive on what we've seen so far" from Ramaphosa, he added.