Minister’s high horse could trample us all

After the Chamber of Mines laid waste to the third iteration of the Mining Charter and the overreach of Mineral Resources Minister Mosebenzi Zwane’s powers in drafting the document, the response from Zwane was sadly unsurprising.

While the department has yet to respond to the urgent interdict application lodged on Monday that tore into the charter for contravening a number of acts in what the chamber called an “egregious overreach” by the minister, Zwane issued a brief statement in response.

Instead of tackling any of the many issues and complaints raised about the charter in the chamber’s affidavit, which will presumably be done in the department’s replying affidavit, Zwane made a serious allegation against the chamber.

He said those who opposed the charter — read the chamber — were opposed to the transformation objectives of the government. It’s a juvenile response to an alarmed industry that directly employs half-a-million people, with some suggestions that 100,000 jobs could be lost if the charter were implemented in its current form.

The take-it-or-leave-it approach that Zwane has espoused in releasing the charter has been noted by investors, who find there are friendlier investment opportunities elsewhere in Africa.

Cool, pragmatic leadership is needed. Zwane needs to stand back from a clearly ideological stance while the chamber needs to find a fresh way to tackle the pressing need for increased transformation of the sector. Too many people’s livelihoods are at stake for this not to happen.

If there was one company that looked set to benefit from green shoots in mining and agriculture, it was Omnia. At the start of 2017, its shares were trading close to a two-year high of R184 as good rain in the east of SA, a better year under mining’s belt and some semblance of policy stability boded well.

But, President Jacob Zuma’s calamitous cabinet shuffle, the protracted legal battle looming over the Mining Charter and the swift disappearance of business confidence are taking their toll on at least two of the industries to which Omnia is exposed: mining and manufacturing.

In the case of agriculture, it may have been too much of a good thing. The huge unwind in white and yellow maize prices following SA’s biggest harvest on record means that farmers face a much less profitable year, although Omnia says demand for fertiliser is expected to be stable as farmers replenish land following higher-yielding crops of the past year.

Not content with destabilising the mining sector, the state seems intent on wreaking havoc in the agricultural sector as Foskor, a state-owned enterprise charged with excessive pricing for phosphoric acid in 2014, persists in an appeal against a high court ruling.

In mining, Omnia has had to cut prices to retain key clients, although sales of a high-end blasting detonator grew strongly and it’s making inroads developing new markets.

In chemicals, Omnia needs to build on new markets to counteract stagnation at home, and in all divisions, slower paying customers are starting to take their toll on cash flows.

Omnia shares lost almost 10% on Tuesday, putting a Bloomberg 12-month target of R190 further out of reach.