ANC opposition to free enterprise has crippled junior mining

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THE South African junior mining sector is broken and is impossible to fix under current circumstances. That’s according to Paul Miller, MD of mining investment trust Concentrate Capital Partner (CCP), an investment fund.

In a hard-hitting speech to the Junior Indaba being held at the Country Club in Johannesburg, Miller cited three main reasons for his pessimistic assessment which included his opinion that the ANC government was fundamentally against free enterprise. The other reasons included the nature of “big mining” and “big labour” which – together with “big government” – have been charged with fixing the country’s mining sector.

Miller pointed out that big mining –  as represented by the rebranded Chamber of Mines  which is now the Minerals Council – represented the interests of sunk capital. “These are people who have money stuck in the ground and have already left. They have either sold down in South Africa or unbundled in South Africa, and even when they have unbundled in South Africa, they have gone and bought assets abroad.

“They are gone. They deny that they are not interested in the future of South African mining; they are being disingenuous.”

Turning to big labour, Miller said the unions were only interested in their members who were currently working for big mining and not “… people who might get a job in the future on a diamond digging site in the North West Province”.

Miller said junior mining was “fundamentally about free enterprise” and only succeeds when “… you have sanctity of contract; you have security of tenure; you have consistent regulation and you have high trust societies with low corruption. We have very few of those in our current environment. We are all very grateful we now have a minister (Gwede Mantashe) who is probably not a crook. But he probably is a socialist.

“Our big government is fundamentally and ideologically opposed to free enterprise. You cannot have people representing sunk capital arguing with people representing existing labour arguing with people who are fundamentally opposed to free enterprise and think that they can fix our junior mining sector.”

Miller added: “South Africa used to be the greatest mining jurisdiction in the world and this city used to host the greatest mining stock exchange in the world. We still have relatively good infrastructure; we still have great skills and we still have some of the greatest mining educational and training institutions in the world.

“We have all of that and yet you can count the number of successful junior miners on two sets of hands. That is pathetic. We should have hundreds of successful junior explorers and producers, not handfuls.”

6 COMMENTS

  1. Juniors do not have the time and resources of the big mining houses. You need some assistance from Government in the form of reliable information and quick turn around. Paul is absolutely correct. The question is how do you bring the explorers back to SA. Remember, you need money…most of the funds used to come from Canada and Australia. They all left our shores due to corruption and horrible service from the SA Government. To bring them back is crucial and Government must come up with ways to facilitate that. And trust me…slogans such as expropriation without compensation and nationalisation will not assist in any way.
    So lets see, does Government want investment or not.

  2. There is no political will for change. And unfortunately also no vision any longer to fix that. Same road we are on as Zim mining sector’s except that was 20 + years ago when their troubles started and we are just seeing rhe recovery. Oir govt is making the exact same noises as theirs did. Are we stupid enough to follow down the same road. Seems so. I will not recommend any youngsters to study geology or mining engineering, metallurgy or go into mining finance in SA for a long time. The industry is indeed screwed in SA. Kudos to those who have got it right and are developing new projects but will they create any significant new jobs. No.
    Experienced people will immagrate or stay and work for much lower salaries. Optimism always good but you have to be realistic at some point which is what Paul is in this address.

  3. Deputy Minister Oliphant announced a R200m fund for junior miners – funded jointly by the IDC and the PIC. This may or may not be supplemented by a levy on turnover of existing miners. There is all the evidence you need that the Deputy Minister (who like the Minister comes from a mining labour union background) is entirely ignorant of the economics of mining. R200m would not even get you to Bankable Feasibility Study on a single medium size operation. And in what universe is the government a good allocator of high risk, speculative capital?

  4. Mining is, and will always be, a high capital, high risk enterprise. The risks are high enough already, without any additional BS from governments and unions. SA used to be top of most tables for mining investment – now it’s worse than Zimbabwe. The responsibility for that lies 100% and solely with the ANC. They can choose – jobs and prosperity or dogma and rhetoric. No prizes for guessing which they’ll choose.

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