SI 3 EVACUACIÓN DE OCUPANTES

From 2001 to 2002, the mining sector experienced its second largest decline between 1994 and 2014, which mirrored sectoral, national, regional and global FDI trends. In 2002 FDI into the mining sector declined from approximately R124bn., to R80bn., a decline of approximately 35 per cent. The decline in this specific year is significant as it is the only year throughout the 21-year time period of this study that all three of South Africa’s key economic sectors experienced a decline in FDI. These declines were also similarly high with the manufacturing sector experiencing a 25 per cent decline and the financial services sector a 37 per cent decline. As noted above, this decline also mirrored that of the national, regional and global FDI flows during the same year. During this same year, national FDI flows decreased to less than a third from 5.58 to 1.36 per cent of GDP. Similarly, FDI flows into Africa decreased from 3.2 per cent to 2.3 per cent of GDP and global FDI decreased from 2.1 per cent to 1.7 per cent of GDP. The following will consider to what extent this decline in FDI into the mining sector in South Africa was attributable to an increase in political risk, or if, given the above trend, other factors played a more significant role.

The decline in FDI into the mining sector in 2002, as well as the preceding period, was not accompanied by an increase in macropolitical risk in South Africa. Given that this study is specifically concerned with the extent to which declines in FDI is attributable to increased political risk, it is important to take cognisance of this. As discussed above, while some indicators such as Rule of Law and corruption marginally deteriorated, this deterioration was not assessed by analysts as posing increased risk to investors. Announcements made by foreign investors, such as the one made by AngloGold in November of 2002 to invest further, also indicated the willingness of some investors to continue investing (Bain, 2002). Bain, for example, reported the following: “AngloGold, which is already expanding three of its SA mines, said yesterday it was considering

investing R4bn. in the development of another six deep-level mining operations in the country as the company looks for growth closer to home” (Bain, 2002). The following statement by the Chief Executive Officer (CEO) of Anglo America Limited, Tony Trahar, reported by the United Kingdom’s (UK) Financial Times, also provides some indication of investor sentiments around this time; “That Anglo had no plans whatsoever to move its head office from ‘cost effective and business friendly’ Johannesburg to London” (Venter, 2005: 29). By 1999 Anglo had invested more than R1bn. in South Africa and continued to invest substantial amounts in South Africa’s mining sector, even during periods of increased political risk (Venter, 2005: 29). Once again, similarly to the decline in FDI in 2000, it can be concluded that this decline in FDI into the mining sector in 2002, was to a lesser extent attributable to increased political risk, primarily as South Africa‘s investment climate did not pose increased political risk to investors in the concurrent or preceding period.

Further analysis of this decline indicates that this decline in FDI into the mining sector was also preceded by an unusually high surge in FDI. Similar to the surge in FDI in 1999 following the Placer Dome Investment, an unusually high investment was made into the mining sector in 2001. This resulted in a notable increase in FDI, which preceded the decline in FDI in 2002. In 2001, FDI into the mining sector increased by 36%. According to the OECD this was due to an investment made by AngloGold, reflected in the following statement: “R1,7bn. in FDI flowed in during the first quarter of 2001. The second quarter of 2001 recorded a massive inflow of R52 billion. This figure is unusually high, the largest share of which can be attributed to the buy-out of the De Beers minority shareholders by (London Stock Exchange listed) Anglo America” (OECD, 2001: 2). When investments are described as unusually high, it is explicit that these FDIs will not necessarily continue, and thus FDI, in returning to their usual levels, will reflect a decline in the year following the spike. Finally, given that global and regional FDI also declined during this year, along with South Africa’s other two economic sectors, it would appear that more than local political risk factors played a role in this decline in FDI.

From the above it can be concluded that the decline in FDI into the mining sector in 2002 was to a lesser extent attributable to an increase in political risk. This conclusion can be drawn for three main reasons. The first preliminary reason being that this decline in FDI mirrored that of declines

in regional and global FDI inflows, which would be unaffected by increased local political risk. The second reason is that in this year, the decline in FDI was not accompanied by increased political risk. Neither was there increased political risk in the years preceding this decline. Third and lastly, this decline was preceded by an unusually high inflow in FDI.