Marikana a ‘lens’ for future mining policy

[miningmx.com] — THE ANC has largely decided on the objectives that it
wanted to achieve in changing South Africa’s mining policy, even though the methods
of implementation were still up for debate, according to senior party official Enoch
Godongwana.

Godongwana, head of the ANC’s Economic Transformation Committee, spoke to
Miningmx following the release of the ruling party’s final wording on the
mining policy adopted at its June policy conference.

The document relies heavily on the proposals contained in the state intervention in the
mining industry (SIMS) report, which was compiled by the ANC in 2011. The SIMS
report rules out the blanket nationalisation of mines but calls on the state to become a
much more active participant in the mining sector and suggests a number of ways on
how the fiscus may reap and redistribute a bigger proportion from the private sector’s
mining revenues.

According to Godongwana, the objectives for changing South Africa’s mining policy
could be summarised in four broad categories: the redistribution of some of mining’s
economic benefits to the whole country, improving the quality of life of mineworkers,
the regulation of the effect of mining on surrounding communities, as well as the use
of minerals to boost industrialisation.

He further listed policy proposals on which broad consensus existed, even though the
methods of implementation remained up in the air. These included a higher profile
and bigger role for the state-owned mining company, keeping the cost of electricity in
check by means of pricing or supply interventions in the domestic coal market,
improving transparency in the mineral licensing process, the declaration of strategic
minerals deemed important for beneficiation and the country’s domestic needs, as
well as the creation of a simple taxation mechanism.

The ANC’s national elective conference in Mangaung, scheduled for December, would
finalise policy objectives, but Godongwana did caution that one shouldn’t immediately
expect clarity on how these objectives would be attained.

“A conference is a nightmare because you are asking 7,000 people to decide on
complex matters in four days,’ he said. “The best a conference can achieve is broad
policy objectives. It is for the technocrats to formulate how we attain those
objectives.’

What the ANC was still grappling with was how, for example, Eskom could be
guaranteed coal supply while not having to pay export prices.

“What I can definitely say is there will be an intervention for domestic coal, that is
going to happen,’ he said. “As for the instruments that would be used is difficult to
say. We don’t know, we need to work out the detail.’

Godongwana said that the ANC has not even reached consensus over a model for the
state-owned mining company. He himself is a strong proponent for an investment
model, where an institution like the Industrial Development Corporation would hold
shares in otherwise privately owned mining companies. The second proposal is that of
an operator.

“It [the model] has not been decided, even though the state miner has already started
to operate,’ he said.

Measures which the mining industry would welcome is the Sims document’s call for
greater transparency in the mineral rights application process. One proposal to this
end is to move the issuing of mining permits from the department of mineral
resources to an independent agency.

“The debate is not the principle of transparency,’ he said. “What we want to do is to
remove the discretionary power from officials, some of whom are still juniors. With
that goes timelines for the processing of applications.’

Some platinum miners have in the wake of the recent labour-instability in the sector
said the government should consider spending the royalties that companies pay in the
areas where miners operate – an idea Godongwana dismissed.

“Only 10% of our people live on minerals, so what about the rest?’ he said. “The
argument, by implication, says mineral rights do not belong to all South Africans. This
argument is also used by the mining industry for failing to implement their social and
labour plans.’

POLICY CERTAINTY

Godongwana said the recent events at Lonmin’s Marikana mine have highlighted the
need to prioritise the creation of an adequate policy framework over investors’ calls
for the speedy attainment of policy clarity.

“The question shouldn’t be on how we get policy certainty, but on how we confront the
challenges we have,’ he said. “When you look at mining, it’s impossible not to use the
lens of Marikana. It has become a milestone that will shape our policy approach over
mining. There is no doubt about that.’

“If you were to ask me, I would say the number one problem we
have in this country is unemployment.’

Asked whether he thought ongoing policy uncertainty would jeopardise the
government’s objective of creating 140,000 new jobs in the mining sector by 2020, as
earmarked in the New Growth Path, Godongwana said the sequencing of different
objectives was one of the state’s biggest challenges.

“If you were to ask me, I would say the number one problem we have in this country
is unemployment,’ he said. “Therefore the sequencing would be to what extent we
first and foremost create more jobs.

“Other people may have other objectives. If you were to ask a black business person,
he would say empowerment is key. There are all type of objectives we want to
achieve; the challenge is how do we sequence them.’

He also dismissed the notion that decisions on mining policy could get caught up with
the ANC’s leadership race, saying the party would separate leadership elections from
the mining debate.

“The Youth League is trying to do that, but I don’t think the whole of the ANC is in that
mode,’ he said. The ANC Youth League, which in 2011 adopted the nationalisation of
mines as its policy, has on numerous occasions said that it won’t support any leader
who does not underwrite the body’s stance on mining.