SA mining’s future is in the balance

There is little doubt that the future of SA’s mining industry hovers between revival and accelerating decline, and that the government deliberations on a new mining charter could swing the balance.

It has been a tough few years for South Africa’s labour-intensive mines, which have struggled to retain their lustre as technology has improved productivity elsewhere. Prolonged labour unrest, volatile prices, red tape and political uncertainty have compounded the challenges. Although untapped metal and mineral reserves remain world class, an increasing number of companies have downsized or sought to disinvest. Tens of thousands of miners have lost their jobs.

Blame for this state of affairs lies all around. It is a truism in South Africa that to transform society you must first transform the mines. Since the transition to black majority rule there has been an obvious political imperative to reform the racially based system of cheap, migrant labour pioneered by the Randlords in the 19th century. Yet the ANC was wary of the broader repercussions on the economy and was initially timid about driving through change.

The companies, meanwhile, never fully entered into the spirit of the times. Sound initiatives to improve conditions for miners have tended to gather dust. The colour of some boardroom members changed as black economic empowerment saw stakes in lucrative mining stock allocated, mostly to the well-connected. The same concentration of capital, however, has to a great extent endured, feeding the perception that companies have enjoyed the dividends of democracy without doing enough to tackle inequality.

The goal must be to modernise the industry and make it safe, cost-efficient and capable of delivering the jobs SA needs. It is in the interests of companies and the government both to incentivise investment and to have a happier workforce. London, February 8.