Reality blights hope of spring

THERE ARE OTHER MUCH EASIER AND MORE ATTRACTIVE DESTINATIONS FOR MINING INVESTMENT

This week’s Mining Indaba comes amid signs that the commodity cycle may be turning. The prices of some of SA’s key exports, such as iron ore and coal, jumped late in 2016. Although there are still doubts about how sustainable it all is, there are — as Mineral Resources Minister Mosebenzi Zwane put it in his opening address at the indaba on Monday — “signs that we are entering a new spring”.

But SA will not be positioned to take advantage of the green shoots of spring, or the heat of summer, unless the environment for mining is conducive to private sector investment. And the minister’s bland speech was frighteningly short of any sign that he had understood investors’ concerns about the regulatory environment for mining — or that he had intentions of doing anything about these concerns.

The minister said next to nothing other than that the Mineral and Petroleum Resources Development Act would be concluded by June and that the final Mining Charter would be gazetted by March. Those are dates he had already disclosed at a recent media conference on mine safety.

But nothing he said served to signal clearly to investors that he wished to reassure them or that it was his priority to make SA an attractive destination for new, and in particular foreign, investment.

The indaba comes after a year in which relationships between the industry and the Department of Mineral Resources have become increasingly combative.

After years of uncertainty about the revision of the Mining Charter and lengthy negotiations over its contents, the department shocked the industry earlier in 2017, when it presented a tough third draft of the charter.

There had been no consultation on this third version and the full text has still not been published. The PowerPoint presentation on the draft charter given by the ministry contained a series of proposals that would make SA’s mining environment even more inhospitable for the private sector than it is already, and even more vulnerable to corruption — all in the name of “transformation”.

The minister blithely told the indaba that the charter would be “reflective of the views of stakeholders” and called on investors to “engage us frankly”. But his recent record and that of his department hardly inspire confidence.

His veiled comments on mine safety would surely have inspired concern, too, in a context in which the industry and the department have been at war over enforced safety stoppages that are sometimes way out of proportion to the risk and may be targeting some companies more than others.

In 2016, the courts ruled against the department and criticised its officials in two cases involving mine safety and mining rights. And Sibanye Gold has now taken the minister and his officials to court over safety stoppages at its mines. But Zwane seemed to brush all this off, saying “the department will continue to enforce the legislation consistently and I have full confidence in the officials who administer these laws”.

Zwane reserved his enthusiasm for the new junior to mid-tier miners that he believes will be flocking into the sector in the near future. And it would indeed be a fine thing if SA were to attract lots of new, job-creating investment and exploration by junior miners, local or foreign.

But there are other much easier and more attractive destinations for mining investment, by junior or senior miners, and international investors are increasingly passing SA by. Many at the indaba are understandably more interested in mining in the rest of Africa than they are in mining in SA.

And as long as the minister and his boss refuse to see the need to make the sector attractive, they will continue to preside over a wintry industry.