PROMINENT ex-fund manager and a non-executive director of Anglo American, Jim Rutherford, said the South African government was afraid of allowing the market to operate independently, and that it ought to step out of the way of its mining industry.
“What underpins a lot of ANC policy initiatives is that I think they are frightened to let the market operate on its own,” said Rutherford responding to questions following a presentation to the Junior Indaba, a mining conference.
“There’s always this underlying desire for control. And to my mind, government has got to get out of the industry’s way and let it get along with investing,” said Rutherford.
“As I’ve said on many occasions, investment follows returns and not the other way round. Really, what the ANC should be focusing intently on is how can you create and environment that is conducive to attracting investment.”
He cited the example of Eskom in that the government was reticent for the private sector to contribute towards power generation through independent power producers (IPPs). Eskom is state-owned and reports to the Department of Public Enterprises. The company is saddled with more than R450bn in debt following cost overruns on capital projects.
“Just look at the crisis around Eskom and the delays involved in allowing the industry to construct IPPs and deal with the power crisis. That’s something that should have been done ages ago. That’s the kind of thing I’m talking about,” he said.
Rutherford was previously senior vice-president of Capital International Investors, a division of Capital Group.
Rutherford, who is also chairman of Egyptian gold mining firm Centamin, said the current South African mines minister, Gwede Mantashe, should be credited with helping to repair the relationship with the sector.
“The relationship today is very different from four five years ago,” said Rutherford, referring to former mines minister, Mosebenzi Zwane, who oversaw the writing of the infamous third Mining Charter, subsequently re-written under Mantashe.
Rutherford also acknowledged the work of Anglo American CEO, Mark Cutifani, who he described as “… the perfect person to come in at that point in time” because of his technical background. “One of the challenges facing Anglo American is that it was a company in the past that had a tremendous reputation for technical excellence.
“It had lost that reputation and what Mark has done is not just improve the operating performance but rebuilding that technical capability. He also has a very good knowledge of how a balance sheet works. He has been very insistent on return on capital matters.” Cutifani was appointed CEO of Anglo American in 2013.