[miningmx.com] — SEEN from afar, the events during the last seven days have presented the worst possible advert for South African mining, and may have dissolved many of the benefits of mines minister Susan Shabangu’s and the Chamber of Mines’ hard-earned MIGDETT (Mining Industry Growth, Development and Employment Task Team) process.
Four months ago, government and the mining industry met in a spirit of closer cooperation where competitiveness and sustainability shared the stage. That was to be followed by an international roadshow articulating the way forward for the industry. Now, there’s only confusion, recrimination, fear, and the overwhelming perception that the South African mining industry is a vexed, disturbed, and compromised sector dominated by cronymism and no more attractive to foreign investment – and probably less so – than some of the less developed nations in Africa.
At the time of writing, Sivi Gounden, formerly of Lonmin, was declaring his right to have swooped on chrome tailing mineral rights forsaken by the platinum miner, a position Lonmin is disputing. Kumba Iron Ore, meanwhile, was disputing it acted improperly when applying for mineral rights over Sishen Iron Ore Company following an extraordinary letter penned by former deputy director of the mineral resources department, Jacinto Rocha, who claimed Kumba had influenced a minor official in one of the department’s regional offices. Why Rocha should be moved to enter the fray, only he knows. He claims to be “a concerned citizen’ yet appears to be speaking on behalf of government. For its part, government is silent.
The two incidents demonstrate a deficit in the mineral licence conversion and prospecting licence application process that has long been identified by people in the field: applying for licences is not a clear, transparent nor simple process. Mining companies have been telling me this for years. No-one can see who has applied for what prospecting areas. It’s impossible to get progress reports on one’s application. And underpinning the entire troubled process is the legislation which hands government officials too much discretion over awards of licences.
Government can’t claim to be ignorant of these issues. In February this year it commendably promised to improve efficiencies in the granting of licences, making the application process quicker. The resignation of Rocha, described by some mining companies as obstructive, was also viewed positively if the mineral resources department wanted to progress. But it’s all too late. The Lonmin and Kumba disputes have their roots in licence application problems that easily predate government’s promise to streamline the process. We’re now paying for weaknesses in the original architecture of the Minerals and Petroleum Resources Development Act.
Friends, relatives of Government
ArcelorMittal SA’s empowerment deal with Imperial Crown Trading (ICT) is so worrying because it legitimises the controversy of it having been awarded mineral rights over the Kumba Iron Ore Company area in the first place. The fairness of that award is a court matter, and it would still seem, one of arbitation between Kumba Iron Ore and ArcelorMittal. But to have given ICT a place at the table before legal judgement is passed somehow makes null and void the need for an objective outcome. ICT has its reward.
Oh, and who is the commercial sharp end of ICT in the empowerment deal? Sandile Zungu, who desperately sought a position as chief aide in the president’s office earlier this year and is a major Zuma supporter, heads the ICT consortium. He is joined by the Gupta family who, the Mail and Guardian observed recently seem to have replaced the Shaiks as President Jacob Zuma’s financial aides, and of course Duduzane Zuma, the president’s son.
But for a demonstration of why awarding political friends and family commercial opportunities is oftentimes the road to hell look no further to Aurora Empowerment Systems which has presided over the human tragedy that is the Grootvlei mine.
This is the third event that has mired the South African mining industry in the past week with the killing of at least four “illegal miners’ by Grootvlei’s security forces. The illegal mining problem at Grootvlei – which quite honestly is probably desperate employees trying to earn a buck because management hasn’t money to pay them a wage – is one of a series of unacceptable breaches of ethics at the mine committed by management.
As we all know, management is Khulubuse Zuma, President Zuma’s nephew and Zondwa Mandela, grandson of Nelson Mandela, the former president, who together run Aurora. What’s astonishing, other than the complete diffidence with which Zuma and Mandela treat the human and environmental disaster at Grootvlei, is that Enver Motala, joint provisional liquidator of Pamodzi Gold which previously owned the mine, allows Aurora to continue managing the mine.
Aurora clearly has no money left. Motala told Miningmx on Friday that GEM, a Swiss-based firm, was ready to provide interim funds to Aurora for Grootvlei, and its other South African mines, within “two days’.
Said Motala: “I personally had a conversation with the GEM yesterday (Thursday) and they have confirmed that Aurora is getting interim funding from them. The capital is expected to come through any time from now (Friday) and the next two days. This interim capital will be used to keep the mine on care and maintenance until October.
“As liquidator, we feel that this transaction has dragged on too long. We have even been to court over the matter and would like to see the transaction finalized by the end of November. We can’t say how much the balance payment for the mines will be. So far Aurora has paid R10m and the package for both mines was R390m for the Grootvlei operations and R250m for Orkney.’
In the meantime, Zuma and Mandela face prosecution for allowing polluted mine water to flood the neighbouring vlei which is a nature reserve. I think they couldn’t care less. You can’t get either man on the phone and there’s barely a comment passed through Fazel Bhana, who acts as Aurora’s press officer.
Instead, however, one regularly reads of Khulubuse Zuma’s vaulting commercial ambition, which includes oil in the Congo, forestry in Zambia and automotive and shipping deals in China and Korea, even as Grootvlei struggles. Zuma claims to want a fortune of $10bn in 10 years, according to an interview he gave website, Newstime. He then told the Financial Times he wanted to do a deal in every African country.
And of his political sway, he was ambiguous telling Times Live the family named has never been used as currency while speaking somewhat more plainly to the Financial Times whom he told: “But if my name provides some magic in what I’m doing, all the better for me’.
