Mantashe’s poor lack of insight

Impala Platinum stands accused by the Department of Mineral Resources and minister Gwede Mantashe of “arrogance” in its company-saving announcement of shutting or selling five shafts and cutting 13,000 jobs over the next two years.

Mantashe echoed then-mineral resources minister Susan Shabangu’s equally provocative and charged attack on Anglo American Platinum in 2013 when it unveiled plans to cut 14,000 jobs, as well as close and sell shafts at its Rustenburg mines. Shabangu too used the word “arrogance” and went a step further to threaten the company and parent Anglo American with their mining licences in SA.

Name-calling and attacking a company with its back against the wall after being brought into the decision and shown how dismal the situation has become shows a striking lack of empathy for companies going through incredibly difficult decisions, a naked lack of understanding of basic business and a desire to put cheap politics ahead of robust, honest talks about how desperate the environment has become for some platinum miners.

Job cuts is a highly charged issue in SA, particularly as the country heads towards national elections and the ANC, which has seen support eroded at municipal level, perceives itself in a precarious position, especially with the governmental and economic disaster that unfurled under former president Jacob Zuma. The latest data from Statistics SA show 6-million people out of work. The mining industry lost 38,000 jobs in the second quarter of 2018.

It’s not like the problems at Implats, the world’s second largest platinum producer, were unknown. In fact, it has probably taken the company too long to make a decisive cut on unprofitable production as it hoped for a large and sustainable increase in the prices of the metals it produces. That just hasn’t materialised.

If anything, global sentiment towards diesel engines, which is a major source of demand for platinum in autocatalysts to clean their exhaust emissions, has worsened and prices have fallen to near-decade lows.

Lonmin, the world’s third biggest platinum miner, is shedding 12,600 jobs as it finally cuts unprofitable mines from its portfolio, again a decision that has taken too long and left the company on the edge of ignominious failure. Sibanye-Stillwater has launched a bid for the company that must succeed to save the remaining 20,000 jobs at Lonmin.

Mantashe is the minister who astounded a mining conference audience in April, shortly after taking up his role, by saying there was not a crisis in the platinum sector. Instead, he blamed any problems the companies faced on their poor relationships with employees and communities. It was such an out-of-touch comment that it had delegates shaking their heads in disbelief that this was to be the new champion and regulator of an embattled sector, let alone a troubled mining sector beset by years of regulatory uncertainty, hostile interactions with the ministry, particularly around department-ordered safety stoppages, which were successfully overturned in court, and the fiasco that was the tenure of Mosebenzi Zwane in the role of mines minister.

The figures speak for themselves. From a 40-year peak of 829,000 people employed in mining during the mid-1980s, the number is now well below 450,000 and falling. Barely a month goes by without another company announcing it is scaling back.

As bad as the platinum sector is, the gold mines are worse. There is simply no incentive to invest in new mines or put money into extending the lives of mines.

Investors are running scared of SA and its regulatory uncertainty, as well as the political turmoil around land expropriation, which cuts to the core of sentiment about the security of tenure and the wisdom of long-term investments.

While there are underlying macroeconomic problems keeping platinum prices low and that have fed into decisions to not invest heavily in SA’s mines and their future, the prevaricating around amendments to the Mineral and Petroleum Resources Development Act, which have been in the works since 2012, two back-to-back investor-unfriendly mining charters to replace the second charter, a shambolic minister in the form of Zwane, and the overtly hostile tone adopted by Mantashe is only serving to underscore the anti-SA mining sentiment.

The end result of these factors — and more are now starting to bare themselves — is an ugly, nasty mess as unemployment steadily increases in a sector that could so easily grow if nurtured, encouraged and sensibly managed by the government.

IT’S NOT LIKE THE PROBLEMS AT IMPLATS … WERE UNKNOWN