South Africa is still mining the same mistakes a quarter of a century later

photo : businesslive

 

The much-vaunted renegotiation of the third version of the Mining Charter this weekend came down to a clarification that the ANC is not willing to change its major thrust and is interested only in negotiating the details. This will disappoint the industry, which was hoping the accession of President Cyril Ramaphosa would mean there would be a halt to the industry’s slide into being unviable.

As if nothing had changed, Mineral Resources Minister Gwede Mantashe rolled out a continuation of the argument the ANC has been having with the mining industry for the past quarter of a century.

Ignored was the more than R200bn in value transferred since the Mineral and Petroleum Resources Development Act was passed. Ignored was that three of the four Chamber of Mines office bearers present were black. It was as though the last 25 years had barely happened.

Instead it was, according to the government, about the mining industry remaining too white and how it should belong to the “indigenous people”. No indication that transformation pressures would ever have a ceiling.

Investors will not outlay their money only to have 30% of it transferred immediately into the hands of South Africans, no matter how deserving. Without a continual flow of capital, the industry will not grow, even established mines will become exhausted and jobs will disappear.

From the vested interests in the room, there were several notable absences. The Association of Mineworkers and Construction Union didn’t accept the invitation but Solidarity and United Association of SA trade unions did. I was invited as part of a small parliamentary delegation, perhaps to prove there were consultations.

Underlining the fact that mining policy amounts to a deal between elites, community representatives were also absent. Granted, communities have an amorphous nature, but they arguably have more claim than the South African Mining Development Association, a pressure group demanding greater handovers of shares from companies into the hands of black South African “entrepreneurs” — code for passive tenderpreneurs. They were there in force.

In fairness, government representatives indicated that communities would get report-backs. The main process would be concluded among this weekend’s players as they get down to detailed negotiations over the next three weeks. At this weekend’s meeting it was clear the fundamental conceptual failure at the heart of the government’s mining policy is the belief that SA can have an increasingly strict set of rules enforcing race-based giveaways by mining companies and still have a growing industry.

The ANC believes SA’s mineral resource is so attractive that investors will never stop coming and that industry opposition to the third Mining Charter is solely a negotiating tactic to hang on to white privilege. There is no cognisance of the evidence that investment is drying up and going elsewhere. The ineptitude of this approach almost beggars belief.

Absent and unrecognised stakeholders are those in the industry whose jobs will be threatened by the inevitable failure of this process to attract even “staying-in-business” capital. Their unions are either too short-sighted or too uncaring to realise the importance of investment.

Absent too was anybody to represent the interests of the more than 9-million unemployed who would have a chance of finding a job if the industry was governed by rules that allowed it to attract growth-giving investment.

There was little talk of how the charter would make it harder for junior miners to raise money. Perhaps the greatest indicator of the extent of the trouble in the mining industry is the lack of junior miners, who start and develop prospects that turn into big mines with long lives.

As the big mines become worked out, there is nothing to replace them. The Chamber of Mines pleaded that the charter not restrict junior miners too much, but seemed to attract scant attention.

I had a chance to make these points. If any in the room felt they were correct, they were too browbeaten to agree publicly.

After the nightmare of the years when Mosebenzi Zwane was minister, most of the mining industry and commentators believed that President Cyril Ramaphosa would allow the industry to back out of the dead end down which it was headed. They will be staggered that despite the mass of evidence about how the industry is going wrong, the new dawn is just business as usual.

Source :

businesslive

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