What’s Samda playing at?

[miningmx.com] — WHAT’S eating the South African Mining Development Association (Samda), whose members consist of junior and mid-tier mining companies?

This question has to be asked after recent hard-line statements attacking Government’s black economic empowerment policy by chairman Nchakha Moloi and president Bridgette Radebe.

Samda has also commissioned major research reports on the status of empowerment as well as in support of proposed nationalisation of the South African mining industry, which have been published by KIO Advisory Services (KIO). The overall result seems to be Samda has got right up the noses of both the Chamber of Mines and the department of mineral resources.

Radebe, who in addition to being a prominent businesswoman, is the wife of Cabinet minister Jeff Radebe, was twice refused permission to address the briefing on SA’s amended Mining Charter hosted by Mineral Resources Minister Susan Shabangu in Pretoria on 13 September.

The Chamber of Mines uncharacteristically came out swinging in a release from CEO Mzolisi Diliza on 24 September responding to the nationalisation debate and attacking KIO in particular. Diliza said: “It’s incomprehensible how the authors of the KIO report released earlier this week could have arrived at their conclusion that what transpired in Zambia presents good reason for our Government to nationalise SA’s mines. Such illogical reasoning raises suspicions about the motives of both the authors and the sponsors of this so-called research.”

But the KIO report, while being pro-nationalisation, didn’t actually contain the precise conclusion about Zambia that Diliza asserts it does. In fact, the report notes: “Nationalisation has failed elsewhere – specifically in Zambia.”

Spokesman Jabu Maphalala says the Chamber was responding to comments reported in an on-line media article he couldn’t provide Finweek with. A web search has failed to find these comments.


KIO report author – and former financial journalist Duma Qubule – says he can’t recall exactly what he may have said in various interviews. But he confirms his assessment of Zambia is that the country “went the extreme route in nationalisation and then subsequently the extreme route in privatisation, both of which did it a lot of damage’.

The conclusion to be drawn must be that the increasing focus on the issue of nationalisation has touched a raw nerve at the Chamber, which until now has kept its public statements bland and non-confrontational.

The decision to put nationalisation on the agenda for the next ANC policy conference in 2012 takes it beyond the benign corporate view held to date that the debate should take place as “part of a healthy democracy”. No matter how remote the chances of SA’s mines being nationalised may appear, the mere fact the debate is now on the official political agenda is going to stall inward capital investments. That despite nationalisation being rubbished up-front as a policy by Cabinet minister Trevor Manuel, who will be in charge of carrying out the research required as part of the 2012 presentation.

Diliza says: “The Chamber and its members are emphatically opposed to the nationalisation of the country’s mines. Nationalisation is an antiquated and universally discredited political practice that will have disastrous consequences for the national economy.

“To nationalise SA’s mining sector would create potential for our country to be declared a pariah by the global investment community.”

Reaction to the nationalisation debate from delegates at recent investment conferences such as Africa Down Under and the Denver Gold Forum underscores the accuracy of Diliza’s assessment. And this brings us back to the question about Samda’s stance because, should SA’s mines ever be nationalised, Samda’s members are going to be hit just as hard as those belonging to the Chamber.

Suggestion from one executive from a Chamber member is that Samda is doing this as a strategy to increase its share of SA’s mining pie because it isn’t happy with what has come its way so far through empowerment. This assessment would fit comments made at the amended Mining Charter briefing on 13 September by Moloi, who slammed Government for not implementing the law and all mining industry role players “for not pulling their weight”.

Moloi added: “The people in the mining industry believe they can break the law and there will be no consequences. I want to see one mining company lose its mining licence for not meeting requirements.”

These comments fly in the face of the very real practical problems in the implementation of agreed empowerment targets acknowledged by both Government and the Chamber. They also jibe with the stated objective of Government, organised labour and the mining sector to work together to transform the mining industry through Migdett (the mining, growth, development and employment task team).

Moloi didn’t return calls from Finweek.

The article originally appeared in Finweek