Deloitte SA Blog

Access to electricity stands at 26% in sub Saharan Africa, the lowest worldwide and the picture is even worse in rural areas where it is estimated that only 5% have access to electricity (WHO, 2009). All agree that significant change is needed in order to rectify the imbalance.

The effect of a different kind of change – climate change – has resulted in a massive push worldwide for the growing need for electricity to be met by renewable energy sources and Africa is no exception. The South African National Energy Association believes that Africa’s energy supplies would have to increase at least fourfold by 2025, if the continent were to meet the energy demand of its people. Ideally the largest portion of that supply should come from renewable sources.

The perplexing energy security situation contrasts strikingly with the abundant natural resources of the sub-Saharan Africa region: most countries in the region have renewable energy potential many times the current demand and the potential is exploitable using currently proven technologies and available know-how in electricity generation from hydro-power, as well as geothermal, wind, biomass and solar energy sources.

To date, the potential benefits of renewable energy have to a large degree not been seized in the sub-Saharan African region, despite the many economic, social and environmental advantages associated with it. Renewable energy can put an end to South Africa’s reliance on fossil fuels such as oil and coal and can be an avenue to better exploit the economic opportunities offered by international carbon markets.

The most severe challenges facing the continent, with regard to power generation include inadequate development of the energy infrastructure, high capital costs attached to energy projects, the lack of technical expertise and perhaps most importantly, the lack of finance and investing in energy projects.

Thankfully, a broad range of financial institutions are starting to invest or lend money into the renewable energy sector in sub-Saharan Africa. Global investment in the renewable energy sector grew exponentially from $22 billion in 2002 to $155 billion in 2008 (UNEP, 2009) when, for the first time, investment in new renewable energy power generation capacity was greater than investment in fossil fuel generation worldwide. The financial crisis in late 2008 did hit the sector heavily, although investor interest in the sector has returned and is growing steadily.

It is estimated that South Africa would need approximately R110 billion in investment to meet the renewable energy capacity as envisaged in the government’s Integrated Resource Plan (Loni Prinsloo, 2011). A large financing gap exists in the power sector as the focus of much of the current spending is on maintenance and operation of the existing power infrastructure, the new build programme of coal-fired stations and the re-activation of previously mothballed coal plants, with little remaining to fund long-term investments and to address the power supply crisis by means of renewable energy sources.

For this gap to be closed, private financiers and investors need to be involved. This is a somewhat new approach given that, traditionally, the bulk of investments in infrastructure (electricity included), have been made by government. Private institutions are becoming increasingly active in a variety of roles across the energy sector, including as debt and equity financiers, advisors and in public-private partnerships.

The private sector, however, approaches investments in renewable energy in the same manner as any other investments. Renewable energy investments, though, have certain characteristics that require an additional level of understanding. These include the influence of policy and regulation on the viability of an investment, including the legal basis and durability of any subsidies, grants, tradable certificates or tax credits. These factors are layered on top of the basic financial analysis of any renewable energy project.

Financial institutions operate on a risk and return basis evaluating each potential investment opportunity on its merits, with financial return and risk being co-dependent categories. Project sponsors, lenders and investors, want to make a return proportional to the level of risk they undertake. So as with all other classes of projects and investment, renewable energy investment becomes more likely and frequent if the perceived levels of investment risk are reduced for a given level of return, or returns are increased for any given level of risk.

The financial profitability of the underlying technology and the extent to which it is financially competitive compared to other competing technologies is critical in driving the financial return of any energy investment. In the context of electricity generated for large, centralised grids, it is still the case that, electricity generation from renewable sources is generally more expensive than from conventional sources.

Nonetheless, generation costs for renewable energy generation are decreasing and certain technologies are already competitive, or at ‘grid-parity’, with conventional forms of electricity generation in many parts of the world. In South Africa, solar photo voltaic generation is expected to be fully financially competitive with conventional coal-fired generation as soon as 2015 (PV Magazine, 2010).

When it comes to the financiers’ assessment of risk, regional circumstances in particular include a variety of investment related risks (country, regulatory, commercial and market risks) that will be more pronounced in sub-Saharan Africa and other developing countries than in developed countries or emerging economies. These risks will immediately increase the return expectations of investors and thus, any project’s cost of capital. Lenders also stress the importance of a credible offtake agreement, with acceptable costing, and ‘take or pay’ features – lenders need to know that their returns are adequate to support the serviceability of the funding over the long project lead time. The combination of these risks and lender requirements, often leads to capital-intensive energy options being discouraged, and the focus being placed on less capital-intensive, conventional energy technologies.

The range of renewable energy risk profiles can nonetheless be matched to the spectrum of financial institutions from banks, pension funds, private equity and venture capital providers. However, the renewable energy sector requires a clear policy environment to deliver the project economics to attract private debt and equity. Policy and regulation continue to be central to ensuring the long term stability of projects from a revenue and operation perspective.

It is thus imperative that both regulation and policy be clear, of a long duration, and legally based in order to deliver growing volumes of private funds into the renewable energy sector.

Sources:

Loni Prinsloo, 2011 – (R100bn investment needed to meet SA’s renewable energy aspirations)

Magazine, 2010 – (South Africa: Grid parity within sight, but Refit needs to be implemented soon)

UNEP, 2009 – United Nations Environment Programme, 2009 (Private Financing of Renewable Energy – A Guide for Policymakers)

WHO, 2009 – World Health Organization (The Energy Access Situation in Developing Countries)

Deloitte South Africa offers a unique view into the intricacies of the national budget with special focus on VAT, international tax, personal income tax, grants and incentives, carbon tax and energy as well as company tax to name a few. Please also have a look at the 2012 South African budget infographic as a snapshot into this year’s facts and figures.

Also download Deloitte’s Quick Tax Guide for a complete snapshot to keep as your own personal reference.

Budget 2012 Commentary

• Macroeconomic Forecasts
• Value-added tax
• Administrative Issues and Other Taxes
• International Tax
• Personal Income Tax
• Company Tax
• Grants and Incentives
• Customs and Excise
• Carbon Tax and Energy

Budget 2012 Infographic

Download the complete Deloitte Budget 2012 infographic here – Budget 2012 Infographic.

Budget 2012 Insomnia Index

Download the 2012 Budget Insomnia Index results here – Budget Insomnia Index

Lee Swan’s rhino being auctioned at The Michelangelo on the 15^th March at 19h00 to raise money for the Wildlands Conservation Trust’s “Project Rhino”

To raise money for the Wildlands Conservation Trust’s Project Rhino, Wildlands has started a Rhino Parade, which includes a series of one-of-a-kind life-size rhino statues which are decorated by a variety of well-known South African personalities. Lee Swan, who is the first woman from South Africa to have reached the Magnetic North Pole (following a race on foot over 820km of frozen Arctic ocean from the Canadian High Arctic to the Pole), is participating in the Wildlands Rhino Parade, and is looking for potential bidders for her Rhino (which depicts her journey to the Pole). The bidding for the rhino starts at R30 000 and we are extending invitations to all South Africa companies to participate. Lee Swan has agreed to present the story of her journey to the pole at the unveiling of the rhino, for the company that purchases the rhino.

For more details, contact Lee Swan at leeswan@deloitte.co.za

When Uncertainty Reigns – Doing business in the new “normal” economy

The years since the 2008 financial crisis have been called  the worst global economic downturn since the Great  Depression of the 1930s. The uncertain and often volatile  business environment has created significant challenges  to which organisations have often had to respond quickly  by adapting strategies and operations. This publication  examines some of the top challenges likely to face companies, and their board of directors, in 2012.

The purpose of this publication is not to provide solutions to the issues discussed. The best approach  for any organisation will depend on its own particular circumstances. Instead, our objective is to assist directors  in identifying issues of importance to their organisations, and to help promote boardroom discussion around the  strategies management has put forward to address the challenges and seize the opportunities that lie ahead.

Download the full PDF Report and discover the 12 challenges that Directors and Management are likely to face in 2012.

We welcome any feedback and comments. Should you require a more detailed discussion, all relevant contact are provided on the paper.

The second report in Deloitte’s Talent edge 2020 survey series features results from a survey of more than 350 employees at large companies worldwide and examines employee attitudes to provide insights into the forces that will drive the talent market over the next decade.

Now that the economy is growing again, corporate executives and talent managers may be tempted to believe that the talent market has returned to normal and that they can go back to “business as usual” leaving them on the losing side of the competition for talent.

However, the report finds that many companies are not addressing the critical needs and potential frustrations of their employee—and often do not have a realistic picture of how employees see them.

The report’s key findings include:

• Employers may risk losing the hearts and minds of employees: With a stronger economy, employees are now actively testing the job market. Only 35% of employees surveyed expect to remain with their current employers while nearly two out of three employees surveyed (65%) desire to leave their current employers.
• What do the 65% of employees looking for the exit sign see that their employers don’t? Among employees surveyed who are actively or passively seeking out new employers, 53% report the prospect of job advancement or promotion would persuade them to stay with their current companies.
• Targeting talent strategies to generations helps keep teams intact: Based on the survey results both turnover triggers and retention incentives vary significantly across employee generations.
• Baby Boomers expressed the strongest discontent with their employers and the greatest frustration that their loyalty and hard work has been neither recognized nor rewarded. 32% of Baby Boomers surveyed cited lack of trust in leadership as a key turnover trigger—making it their top-ranked reason to leave and the highest selection of any generation.
• Generation X employees are far and away the most likely group to be looking at exit strategies from their current jobs. Only 28% of surveyed Gen Xers expect to stay with their current employers with lack of career progress a clear top exit trigger at 65%.
• Millennials have a sharply different idea of what makes for a strong corporate culture than other generations. Survey responses indicate that they are more likely to consider their employers’ commitment to “corporate responsibility/volunteerism” and call a “fun work environment” important compared to Baby Boomers.

Companies that lift their games to deliver “World-Class” talent programs will likely be rewarded: Very few employees define their employers’ overall talent efforts as “world-class” or even “very good” – and the same lack of confidence holds true when it comes to key talent retention strategies. However, survey results indicate that employers that do lift their talent efforts will likely be rewarded with employees who are more satisfied with their jobs and career prospects and who are far more likely to remain with their current employers.

Download the full report . . . . Talent Edge 2020 – Building the recovery together

We welcome your feedback and comments and please share with your network!

by Stephan Freysen, Deloitte South Africa

If you have any questions, require additional information or would like a more detailed discussion, contact Deidre Gouws at dgouws@deloitte.co.za or Leana du Plessis at lduplessis@deloitte.co.za

Knowledge is a successful business

A very famous legend of a conversation between Einstein and a colleague goes where the colleague asked Einstein for his phone number. Einstein then reached for the telephone book, looked it up and repeated the number to his colleague. Startled at the genius’s “lack of memory”, he asked Einstein: “You don’t even know your own telephone number?” “No,” Einstein replied. “Why should I memorise something I can so easily get from a book?”

While this episode happened about 70 years ago, the information age has kept expanding. Due to the incredible rate that knowledge is constructed, we now find ourselves in a maze of information sources that we struggle to navigate efficiently.

Knowledge equals power, and knowledgeable human capital equals a successful business. In this light, those involved in training employees often utter the need for bigger, simpler, better and faster learning solutions. In the search for the epitome of learning solutions, organisations often turn to blended or multi-modal learning as the panacea (ultimate truth).

The main reason for this is that efficient blended learning is not only Einstein’s “telephone book” where you can look up knowledge and refer back to concepts time and again, but also a GPS that assists you in navigating the maze of information sources we find ourselves lost in. The learning component, if supported with solid instructional design (learning design), assists the learner in selecting important information that is in fact required to memorise.

What is blended learning?

Since there can easily be a misconception about the term “blended learning”, let’s discuss exactly what we mean by it. Blended learning implies the strategic mixing of technology-enhanced learning methodologies and face-to-face learning methodologies in order to achieve a holistic learning methodology that caters for all learning styles and learner types.

With the term “blended learning”, we simply mean that the learner now learns with the computer as source of knowledge, and the facilitator facilitates the knowledge construction process and mentors the learner on those areas where the computer cannot.

Can you afford not to invest in blended learning?

It is imperative that we understand the challenges that we need to address and overcome. Traditional face-to-face learning poses a number of challenges, whereas blended learning not only addresses these but also transforms these challenges into benefits.

Benefits and learning in the same sentence? Below is a list of benefits associated with blended learning weighed up against challenges associated with face-to-face learning.

Benefits associated with blended learning

1. Better knowledge retention because individual learning styles are catered for
2. Less time spent training, more time spent working (self-paced and to the point)
3. Better employee productivity because of better knowledge retention
4. Since the e-learning component can be done anywhere (wherever there is an internet connection), at any time, employees can spend less time away from home and more time with their families.
5. Blended learning can be used as a Just-In-Time intervention, e.g. if you need to give a presentation, you can do a quick course on “How to do a presentation” the night before.
6. You can easily return to a course to look up information that you have learnt before but don’t quite remember that well. The lesson will be exactly the same as the previous time.
7. Consistency of learning material and its delivery

Challenges associated with traditional face-to-face learning

1. Individual learning styles cannot be catered for in one class.
2. Peer Group paced and often elaborate; The slowest learner sets the pace.
3. Employees often struggle to retain information, and productivity does not show a marginal increase.
4. Employees often have to travel to training institutions that are far from home and subsequently spend their nights in a guest house instead of with their families.
5. Have to be scheduled for set dates; Often, information is shared too late for the need; Not always easily accessible
6. Learners often have textbooks or manuals from the classes they attended, but these are sometimes not self-explanatory enough.
7. Inconsistent delivery of training due to the human factor, as well as other factors where more than one facilitator is involved

Is the delivery of your organisation’s training truly consistent?

Although face-to-face classrooms work well for the purpose of training knowledge, skills and attitudes, there are often circumstances in which facilitators have to stand in for each other for certain classes. As you can imagine, this can potentially pose problems because people have different ways of transferring knowledge. Facilitator A could potentially have a passion for a certain subject, whereas Facilitator B just doesn’t feel the same way about that subject. This causes an inconsistency in the depth and experience of knowledge transfer.

A facilitator could also easily forget to tell a class something that he has told the previous class; and sometimes, facilitators are just not in the mood to deliver knowledge and attitudes consistently to each class. Fatigue, the time of day, group dynamics, as well as interaction and personal mind-set all play a major role in affecting consistent knowledge delivery.

Since we can safely say that e-learning programmes are programmed with subject content, we can assume that all content is presented at the same pace and at a consistent level every time, to each learner that takes part in that learning experience. We can also assume that all nuances are presented in exactly the same way, thereby eliminating the age-old challenge of training continuity.

With blended learning, every assessment (formative and summative) can also be tracked electronically and automatically. This implies that a facilitator, manager or supervisor can rest assured that all assessments are presented consistently and in compliance with the relevant unit standard’s requirements.

In the case of face-to-face training, there is also a quality assurance challenge, as it is just not practical or financially viable for many institutions to effectively monitor the quality of training over multiple sites, whereas an electronic learning management system monitors the quality of training automatically.

When it comes to blended learning, it is important to note that the computer is a supplement to the facilitator and that the computer and facilitator are in a partnership to enrich learners’ experience, while they integrate the newly constructed knowledge into their world views. In other words, the computer functions as the source of knowledge while the facilitator facilitates the knowledge embedding process by acting when (s)he identifies (with the help of an administration system) that the learner struggles to construct meaning of certain abstract concepts.

What about the learner?

Have you ever been in a classroom situation where you experienced a teacher or facilitator’s frustration with you or a classmate because you just didn’t “get” what the person was trying to explain?

Since a computer does not have emotion (yet), it cannot become impatient. Depending on how the e-learning programme was configured, a learner can have as many tries with assessments as they need, until they get it right – no impatient growls, despondent sighs or rolling eyes from demotivated facilitators.

Learners are all the same in the sense that they are completely different from one another. Every person has a learning preference different from the next person’s, be it the balance between visual stimulation, auditory input and kinaesthetic participation or just the level of interest in the particular subject. The learner’s paradigm (worldview and experience) determines the pace at which he/she learns in a group.

It takes a very skilled, dedicated and experienced facilitator to cater for all these learning styles and to keep learners engaged across, and despite of, their preferred learning styles. Catering for all these learning styles implies that each outcome is explained by talking about it, providing the learner with visual cues for conceptual cognitive modelling and letting the learner act out on his/her newly constructed cognitive model in order to apply his/her understanding.

Blended learning can cover all these learning styles (auditory, visual and kinaesthetic) by means of multi-sensory stimulation achieved through rich multimedia. The application of rich multimedia also allows for the optimised training of semi-illiterate and illiterate people.

The upside of this multi-sensory stimulation is that the instructional designer can explain complex abstract concepts at the hand of detailed audio, visual cues like graphics, animation, photographs and video, as well as planned tasks that the learner can physically explore.

With the blended-learning approach, the instructional designer can cover all six levels from Bloom’s Cognitive domain taxonomy (knowledge, comprehension, application, analysis, evaluation and synthesis). Further to Bloom, the instructional designer can also underpin the learning experience from behaviourism, cognitivism and constructivism, thereby delivering a design that covers all the bases of differentiation techniques.

508 Compliance (catering for people with disabilities) is another large factor that one should consider as a benefit of blended learning. While the facilitator would normally be unable to accommodate a disabled learner in the classroom due to the extra attention required, blended learning technology enables the learner to hear and see things that (s)he would normally not be able to do in the classroom.

Based on the premise that the techniques as discussed are followed in the design of the learning experience, learners will have much higher retention of content learnt than with traditional face-to-face learning. This is because the learning experience is mainly self-paced and unpressured, and affective filters are not raised through the interference of negative human behaviour.

Learning has its own culture

In South Africa, we have a vast number of diverse cultures and sub-cultures mixed into an exquisite rainbow nation. It should be no other way, but it undoubtedly poses some challenges in the training context, since the facilitator needs to have a deep-seated understanding of the vast number of diverse cultures in order to adapt, not to offend anyone and to drive the nail home with metaphors and similes used to explain abstract concepts.

In comparison, designers of blended learning (instructional designers) go through a whole process of understanding not only the ethnic culture, but also the entire organisation’s culture and sub-culture in order to efficiently adapt learning material in such a way that the learner “feels at home” when s(he) goes through the learning material.

Some other challenges that facilitators face are gaps in learners’ memory retention, learners’ attention span, facilitator schooling, and facilitator motivation and class interaction levels.

What does this all come down to?

The business of learning is as intricate as a business itself, and for this reason the person(s) responsible for learning should onsider a methodology that can cater for the dynamics of learning, especially if the organisation is striving for sustainability through optimal people development.

Barbara Sher said “Isolation is a dream killer”. If the dream is to design the perfect learning solution, one could certainly not design this learning solution with little packets of isolation. The solution has to be designed using the best parts from different methods, learning from the past mistakes that educators and trainers have made again and again, and focusing on the balance of the key elements in good design that make learning efficient.

A lesson that the training industry can keep in mind is one from the architectural genius Mies van der Rohe, who said “Architecture starts when you carefully put two bricks together. There it begins.”

Did you find this useful? Do you have anything to add? We would love to hear from you!

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by Dr Jacek Guzek, Director at Deloitte Consulting

For more information or a detaled discussion on the subject, contact Abrie Olivier (Mining Industry Leader) at aolivier@deloitte.co.za  or +27 (0)82 874 6040 and Jacek Guzek (Associate Director) at jguzek@deloitte.co.za or +27 (0)82 940 6896.

Who actually benefits from mining?

Although the tide of resource nationalism has risen globally, with countries from Africa to Australia, Brazil, Canada, Chile and India considering options to increase state interventions in the mining sector, nowhere is the debate as high-profile, emotionally charged, divisive and potentially damaging as in South Africa.

The country is admittedly sitting on a mineral treasure trove second to none: 52 commodities reside under its surface, including the world’s largest reserves of platinum, manganese, chrome, vanadium and gold, and major reserves of coal, iron ore, zirconium and titanium minerals – all at an estimated in-situ value of $2,5 trillion¹. It is evident that the South African mining and minerals sector has immense value generation potential.

But in spite of its mineral (and other) riches, the country has been criticised for being seemingly slow in addressing what Mineral Resources Minister, Susan Shabangu, called South Africa’s “evil triplets”, namely: poverty, inequality and unemployment. Against this context, the proponents of a radical state intervention into the South African mining industry assert that the mineral wealth of the country ends up in the pockets of “monopoly capital” rather than benefiting its population at large. Who actually benefits from mining, they ask, and is it at the expense of those who truly should be benefitting? Let’s examine the question simply from the high-level value creation (or destruction) point of view.

Each (not only) mining opportunity has an inherent, or “in-situ”, value, which could eventually end up in the pockets of enterprising investors, if not for various concessions necessary to convert it into a commercial value all along the life-cycle of the project. These concessions, at a very high level, could include: R&D capital, investment capital, operating costs (including salaries of employees and procurement from suppliers), time value of money, royalties and taxes, etc. (refer to figure 1 below).

In the end, only a small residual portion of the inherent value of an opportunity finds its way to original private shareholders. In our experience, there are many successful mining projects where this residual value is only a lower single-digit percentage of the primary in-situ value. The remainder, in fact the lion share of the inherent value of any commercial opportunity, ends up in the economy at large, either through state treasury or through private sector spending, where it benefits all and translates into wealth and jobs.

Citigroup Global Markets² estimates that “only 7% of the value generated by SA miners gets distributed to shareholders i.e. the entrepreneur and risk taker. The biggest beneficiaries are in fact suppliers to the industry, mining sector employees and the government. To turn opportunity into this value (and many fail along the way) requires substantial upfront investment capital and specialised and scarce skills.

Figure 1: In-situ value graph

The question remains, why would government want to assume full risk of a complex entrepreneurial activity for such an incremental value, given the significant investment requirement?

In spite of some notable exceptions, governments’ track record in managing commercial entities the world over is, at best, inconsistent³. One can therefore question what value will ultimately accrue to society by replacing the role of the entrepreneur with a government institution. Transferring ownership from private shareholders to the state, to ensure “fair” distribution of generated value, creates a different set of incentives for public sector entities, potentially resulting in consequences contradictory to the primary intentions. While maximising shareholder value is what drives the management of private companies, the definition of objectives for a state principal is a lot more complex and politically charged. Alternatives such as financial sustainability, job creation, fair distribution, or community development often require trade-offs between efficiency and policy imperatives, blurring the overall mandate. In addition, performance of managers in the public sector companies is not always subject to the same level of scrutiny as is standard in the private sector. Furthermore, public firms do not face take-overs or bankruptcy, with all their threatening but performance-enforcing consequences.

On the other hand, for a relatively small reward or incentive, private investors shoulder the entire burden of risk in developing and managing complex opportunities. They are also usually willing to wait for returns throughout volatile economic and commodity
cycles. But any entrepreneur has to be assured that this risk is worth taking, considering the alternatives to deploy their capital in the most productive manner, and the security of tenure is the very basic consideration.

It therefore appears that the intensity and profile of the debate on nationalising the mining industry in South Africa is far out of proportion with respect to the actual value that its resolution is capable of generating or redistributing.

Rhodes University economists, Gavin Keeton and Greg White, estimated in 20104 that had the nationalization of the South African mining industry been carried out then, the bill to the government would be around R850bn (i.e. the market value of listed SA mines).

If the government were to borrow this sum at the current interest rates, annual interest payments would amount to R72bn, almost 8% of total state spending. Even if state ownership had been limited to 51% and nationalisation without compensation was considered, the interest payments would still be close to R20bn, as foreign owners of SA mining assets would have to be compensated based on international and

bilateral investment treaties. In return, the government would gain some R20bn of extra after-tax profits of nationalised companies belonging to the state. Claims that nationalisation will enhance the state’s “fiscal capacity” are therefore false.

“It therefore appears that the intensity and profile of the debate on nationalising the mining industry in South Africa is far out of proportion with respect to the actual value that its resolution is capable of generating or redistributing”

Historically, metals and mineral resources seem to have been the favourite nationalisation targets – especially at the peak of commodity cycles when windfall profits have been evident. Only the banking sector can be said to have been targeted for nationalisation with similar resolve. What is conveniently forgotten is that the global mining industry goes through alternating cycles of poor- and super-profitability, and a steady stream of positive free cash flows is not guaranteed.

The South African mining industry, although neither the biggest contributor to domestic product nor the largest employer, cannot be underestimated in terms of its importance to national economy or, indeed, to national identity. It is only natural that a society with the South African level of inequality, debates the best use of its resources. However, the focus of such a debate should rather
shift from re-distribution of relatively insignificant residual value to identifying and removing impediments to growth of the mining industry, which has the potential to generate far greater wealth than is presently the case. More so, considering that efficiency, diversity, and the competitiveness of the mining sector are not questionable.

In the words of the State President, Jacob Zuma: “The state prepares the environment for economic growth and provides support to the private sector by providing enablers and removing obstacles” (a speech prepared for delivery at the World Economic Forum in Davos, Switzerland, January 2012). In such an environment both the state and the private mining sector have at their disposal multiple instruments and tools to optimize components of the industry value graph, which can forward the developmental agenda of the government as well as accommodate just rewards for entrepreneurial risk. Exactly who benefits from mining is as important a question as who would lose on its nationalisation.

For more information, please contact Abrie Olivier (Mining Industry Leader) at aolivier@deloitte.co.za  or +27 (0)82 874 6040 and Jacek Guzek (Associate Director) at jguzek@deloitte.co.za or +27 (0)82 940 6896

Please share with your network!

1. Chamber of Mines, Facts & Figures 2010

2. Nationalisation – killing the goose that lays golden eggs, 29 June 2011

3.“The return of state-owned enterprise: should we be afraid?”, A. Musacchio and F Flores-Macias, Harvard International Review, 31/07/2009

4. Nationalising the mines will be an expensive business, Business Day, 20/09/2010