[miningmx.com] – Mark Cutifani lit the touch paper in spectacular style last night in which he warned the South African government the mining industry might not survive if adversarial labour relations and regulatory uncertainty persisted.
“Don’t be surprised if the mining sector continues to struggle,’ he said of “policy settings changing every five years’.
He also laid into the government’s beneficiation strategy which he said should not support unviable businesses – a reference to state plans for a steel manufacturer to which coal and iron ore, once identified as “strategic’, would have to be sold at discounted prices.
In a wide-ranging speech to the Gordon Institute of Business Science, Cutifani also asked that government departments reach agreement on policies before they were promulgated.
He even extended his assessment to the recently passed visa regulations by the Department of Home Affairs that prevented De Beers’ Chinese sightholders from attending diamond sales meetings in Botswana. Anglo owns 85% of De Beers.
Among his most controversial comments, however, was his response to ANC secretary-general Gwede Mantashe who earlier this week said that industry retrenchments were lazy. Cutifani said they were not only necessary, but that they would accelerate unless labour agreed to change work practices.
Anglo announced on July 24 that it would cut up to 53,000 jobs over the next few years – many of them by dint of selling businesses rather than retrenchments – in an effort to streamline the business amid low and volatile prices for its metals.
“I’ve been criticised that we have been too slow to react,” said Cutifani of comments that the recent slug of Anglo retrenchments lagged the decisions taken by peer group companies. “I take that criticism as the leader,” he said.
“If we can work with labour and the government to negotiate, navigate, and talk to a more flexible labour structure – not more hours – and address issues of migrant labour in more constructive way, that would allow us to operate plant more hours a year … I think we can make a positive difference,” he said.
Anglo would be taking these suggestions to the inaugural mining lab of Operation Phakisa, aimed at identifying and resolving a spectrum of deficits in the mining sector, which received cabinet approval today.
Cutifani said the South African government faced some stark choices because the choices international investors were making were coldly economic.
“The cost to borrow funds is going up because credit ratings are being affected by people’s perception of jurisdictions in which we work,” he said.
“Government has done many good things and has been constructive … I don’t want this to be read as a list of complaints, but there are specific requests in areas where can do better,” he said.
“A government that changes every five years cannot change policy settings every five years,” he said.
The South African government’s evolving view of black economic empowerment has caused industry consternation such as a demand from the Department of Trade and Industry that coal companies supplying Eskom must reach 50% + one share empowerment and not the 26% laid down in the mining charter by the Department of Mineral Resources in 2004.
“We need to provide greater clarity on ownership,” he said. “The most important thing for capital is certainty over ownership and the tenure of land. We can’t keep changing the rules,” he added.
If that is what is going to keep happening in South Africa’s regulatory landscape, then don’t be surprised if the industry struggles, said Cutifani.
“Some things I have said may damage relationships, but you have to take the decisions as a leader,” he said.
It was announced on May 28 that Cutifani was to be appointed chairman of Anglo American South Africa, a sign that perhaps the role would allow him to intervene at a non-operational level on issues relevant to business environment.
Said Cutifani in an interview with Miningmx last week: “Having a chair role in Anglo American SA, one that wasn’t the CEO, that was clearly responsible for key directional moves … I did not think that was inconsistent”.
“It also brings me into the process in a constructive way. I’m also saying that my job is to engage in appropriate way and be more respectful of relationships,” he said.
