Will 2018 be a year of sea-change for beat up SA mining?

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The Constitutional Court

ACCORDING to media reports, the Constitutional Court has potentially paved the way for the National Assembly to impeach President Jacob Zuma – a development that would be hugely positive for business, although admittedly strangely hard to compute at the fag-end of a year which read like an epic tale of political intrigue.

One argument is that it would have been better for the African National Congress to have taken its own action regarding Zuma’s future; perhaps even quicker given that the Constitutional Court has given Parliament three months from its order on December 29 to make rules regulating the impeachment of the president.

That aside, there grounds for hope that the current investment malaise affecting South Africa’s mining industry, and economy in general, may be drawing to a close.

The damage suffered by the mining economy during the Jacob Zuma administration has been grievous. A recent survey by the Chamber of Mines of 16 mining companies found that new investment had halved between 2012 and 2016. The survey also found that of the 16 respondents, five were not considering making any new investment whilst another said it may even from the country if conditions did not improve in 2018.

So what would be required to happen to stop this company, and others, from leaving the country? The popular answer is to rip up the Mining Charter redraft and call all parties to a fresh round of negotiations. That may happen anyway as there are two High Court processes in place one of which I’m especially desirous of seeing completed.

This is the High Court’s declaratory order regarding whether certain past empowerment deals ought to be acknowledged when establishing a company’s BEE status. The ruling could end years of debate and may even provide fuel for a charter re-write anyway. Were this to happen, and there was some way of recovering the process of the Minerals and Petroleum Resources Development Amendment Bill, our want-away company may find more reasons to stay, especially as investing in resource rich, friendly business locales is what the market wants.

The market is in decent shape. The general feeling is that the platinum price has bottomed out whilst the buzz about industrial minerals in electric vehicle manufacturing is exciting for tin, copper-cobalt, nickel and other industrial metal miners.

We may even eventually see some of the benefits of new capital spend mining companies told the Chamber they would be prepared to make in a more investment-friendly South Africa, such as an 80% increase in capital spending – some R122bn more than is currently planned for the year. Were this to happen, an additional150,000 direct and indirect jobs would be created. Imagine that.

7 COMMENTS

  1. Bursting the 2018 Bubble:
    I hate to burst the 2018 new year bubble, let us not forget that in March 2016 the Constitutional court declared the president as a ‘constitutional delinquent’ and said the president failed to fulfil his constitutional obligations. We are ALL aware how the National Assembly dismissed that judgement because in Jan 2018, Jacob Zuma is still the president of the country and it is business as usual. Jacob Zuma, the ANC and majority of the National Assembly members have rendered our constitution irrelevant. It will be oblivious to believe that the recent judgement will the change the status quo when FACTS tells us otherwise. We still have the SAME national assembly members who failed numerously to apply their minds & use their conscious when Section 102 of the constitution was applied to remove the president.

    Economic sore-haemorrhoid after JZ will remain:
    It is short-sighted to believe that when Jacob Zuma leaves office, the ‘mining economic tsunami’ will be history. The global-interdependence is a factor that will remain a sore-haemorrhoid to SA’s economic growth even after Zuma. If we cannot be in control of our resources, we will forever be chasing our tail as a nation. We need to learn from OPEC countries, they are in control of their resources. When we start calling-the short, can also make capital investments and be in control of our economy.

    Chamber of Mines: Their truth and their reality:
    The grounds for investment malaise and mining economy damage in the mining industry is far deeper than Jacob Zuma’s tenure as a misfit president of SA. The wage-gap between mining executives was 500 times larger than ordinary workers before JZ and it has not changed. The ‘grotesque’ pay gap remains unchallenged by CoM & extreme poverty continues to be the second nature to mine workers. Its time CoM starts having uncomfortable conversations with its clients (mining companies), the mining economy damage will not recover when a mine executive takes home R70,000 (seventy thousand Rands) in a day whilst the ordinary worker takes R130 (One hundred and thirty Rands) in a day. The pronouncements from CoM needs to be looked through an eye of a needle. There is a tendency from CoM to be out of reality and to be foreign to the truth. It is impossible not to note that the CoM’s mandate is primarily to ensure that their members are protected at any given cost to the Environment, Economy and Communities. CoM have remained silent on the ‘grotesque’ gap. No need to mention institutional racism in the mining industry that the CoM has been tight-lipped, but quick to say that the mining charter needs to be redrafted when the industry is failing to comply with its own CSR commitments, Women in mining commitments, Employment equity commitments, etc. The DMR released a report which was contradicting the CoM’s assertions. The CoM truth and their reality is far from everyday reality.

    Will 2018 be a year of sea-change for beat up SA mining?
    I would not hold my breath. The mining wheel will continue to turn, the company executives will still earn 500 times larger than ordinary employees and many workers will be retrenched. Lonmin might be part of Sibanye, Impala and Anglo will bleed off unprofitable shafts and many people will be laid off. Weziswe might take off with few casualties due to lower than expected metal prices. AMCU will flex its muscle and NUM will try to rejuvenate itself by shining on Cyril Ramaphosa’s light. To be frank, 2018 will quickly pass because the focus and direction of many investors in the industry will primarily be about 2019 general elections results, its impact on their investments and way of life. Will 2018 be a year of sea-change for beat up SA mining? NO, not at all. Let’s talk after 2019 elections.

    From: Moleko Wa Dihele

    • And football players earn 1000+ times what the paying fans earn…so should the fans complain? Of course they should, there can be no justification for this income disparity, it is not the poor fan´s fault that he was not blessed with football talent… But wait, when the team wins, the fans are happy.
      With publically listed companies the shareholders are the fans and if the company win, the CEO and executives will be handsomely remunerated…or they will leave and score goals for another company…

  2. It is surprising to behold the level of faith that people have in a former militant trade unionist who, when given access to power, used his political position to extort equity stakes in businesses, which he had no involvement in creating, for his own benefit.
    He is no better than the incumbent.
    He is not a businessman. He is a wealthy trade unionist who extorted wealth from capitalists.
    The mining houses were built on certainty- under the previous government, mineral rights were the property of individuals and corporations on which they had indefinite tenure and could strategically manage their future business and capital expenditures.
    That is why huge capital projects could be undertaken. The JSE had a plethora of companies trading mineral rights (Randex, Barnex etc etc) and the mining houses served as financiers.
    South African mining projects were a “sure thing” that paid the taxes and built the country.
    Environmental rehabilitation trusts were well financed, money which under the new dispensation “disappeared”. Who knows anybody who has ever recovered an environmental guarantee from DMR? It is worse than the Bermuda triangle- money simply disappears.
    South African private mineral rights were stolen in 2004. Hulme Scholes was correct, private property was expropriated without compensation.
    Now that the socialist/ communist elites had control and mineral rights were the property of “the state”, the extortion and corruption could commence.
    The South African mining industry IS ALREADY nationalised. It is dead under the present laws and under the present administration.
    The mining industry took one generation to destroy. Entrepreneurs like Bernard Swanepoel correctly recognised that the industry was un-investable and the only viable strategy was short term and that as much as possible should be “harvested”, stripped, and the mines closed down.
    The ANC now have “their” rights and thousands of zama-zamas, which is their natural level of competence in these things.
    26% (now 30%) of no value equals zero. Capiche?
    The mining industry in South Africa will take many generations to recover, and only if and when the government recognises that mineral rights are property to be traded without government intervention. That will not happen soon.
    Capital projects are not a donation to the country or region in which they are situated. The money belongs to others and it demands a return.
    Shares should be bought or issue consideration paid, they are not the right of a “community” or “workforce”.
    The disorganised, corrupt rabble surrounding mining projects are not “communities” and the only entitlement they have is to sell their labour at the going rate.
    The South African mining industry is an un-investable basket case. The only projects worth considering are small to medium surface capital projects, with short lead times and fast payback. Close it down. Mercy kill it. Who cares?
    The entire planet is now accessible. South African miners should use the opportunity. Get out of South Africa and do your thing!!

  3. Amen brother! Those of us who are already working and investing outside South Africa will all agree that it is so much better and no one I know will ever go back there, even if the ¨new¨ government make some changes. We just cannot trust them, ever again…. The political fanatics will probably say well, good riddance!
    Good luck with convincing the minerals to discover themselves, develop a mine without capital and then walk themselves out from underground and into the markets…
    The mining industry in SA is all but dead, soon to be so forever…

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