[miningmx.com] – SUSAN Shabangu’s virulent response to Anglo American Platinum’s (Amplats’) restructuring plans is truly mystifying, partly because it’s a departure from form.
Never one for understatement, her utterances regarding her portfolio have generally being positive. For instance, she famously dismissed nationalisation as a policy she could support telling an international conference in 2010 that it would be installed “over my dead body’.
If anything, the attack on Amplats, and its parent company, Anglo American, is reminiscent of her first major encounter with the mining industry, some six months into her tenure as mines minister in 2009 when she told a Chamber of Mines annual general meeting that it ought to prepare for the worst. They should wish her dead, she said, since that was the only way they were going to avoid a fresh round of fundamental legislative changes.
Since then, Shabangu has tended towards caution; she has been a rational voice among the ranks of the mining sector’s regulator, though perhaps a little out of touch lately.
She told an Australian mining conference weeks after the Marikana massacre that it was due to “bad elements in our society’ and that South Africa was a country open for business. It was a thoughtlessness that reminded one of her fateful comments while deputy safety and security minister to police services at Danville in 2008 when she said: “I want no warning shots. You have one shot and it must be a kill shot.’
One can’t be sure Anglo American CEO, Cynthia Carroll, was thinking of Shabangu’s address to the Australians when she remarked to an audience at the Gordon Institute of Business in December that: “International investors will not be comforted by well-meaning reassurances that fly in the face of the facts’. But it sure throws Shabangu’s comments into an uncomplimentary light.
The facts would now seem to suggest South Africa as a mining jurisdiction is certainly not open for business, at least not to Anglo American, and certainly not in a way foreign investors would appreciate. Instead, Anglo must now bear scrutiny of its mining licences in a display of departmental ineptitude that puts the country on the same footing as Zimbabwe; less for its whimsy than the sheer lack of restraint. This is a knee-jerk reaction of note; totally unconsidered.
One can’t see how Shabangu is helping anyone’s cause; not even Government’s. For example, just what exactly does the public enterprises minister Malusi Gigaba make of Shabangu’s desire to have Anglo American Coal’s mining licences picked over, especially given the paucity of future coal supplies to Eskom. Isn’t Anglo building the New Largo coal mine that is crucial to supplying – and justifying – the Kusile power station?
As for Anglo, this could blow up nastily. A restructuring of Amplats was meant to give fresh legs to a part of the business that differentiates it from its peers. BHP Billiton, Rio Tinto, and Vale lack exposure to the platinum sector, albeit an industry under pressure currently. How much more difficult now for incoming Anglo American CEO, Mark Cutifani, to fend off calls that Amplats be split from the group.
Chris Griffith, CEO of Amplats, told Miningmx yesterday that notwithstanding the cuts in production, cost increases will remain above inflation while, to be honest, the company will be ex-growth for the next 10 years given the cuts in capex. Is this a business worth the political and regulatory hassle, investors in London may ask?
Shabangu, too, is heading into choppy waters. Later this year, she must speak persuasively about changes to the Minerals and Petroleum Resources Development Act (MPRDA), amendments that have so far attracted some negative commentary. Then there’s the potential overhaul of the mining industry’s tax regime, and some other changes contained in the State Intervention in Mining document.
Shabangu will need allies, not foes, from among the ranks of mining investors, if the policies she fronts are to be adopted. Instead, she has provoked an industry onto its hind legs.
The spat with Anglo can be retrieved; calm can be restored. But it will need a meeting involving her and Chris Griffith, and preferably Carroll herself.
Carroll can explain why the restructuring of Amplats in 2009 – in which some 19,000 jobs were lost – didn’t provide the required change in business prospects because that’s an area of Shabangu’s attack on Anglo that does need explanation.
