No quick fix for mining malady
Delegates at the 25th Mining Indaba left Cape Town somewhat more optimistic about the state of SA than they have been in a number of years. Cyril Ramaphosa, the first sitting president to address the conference, had a packed conference hall and spillover rooms eating out of his hand. His administration picked some low-hanging fruit in the mining industry shortly after coming to power a year ago, earning him muchneeded goodwill among mining companies and investors.
The withdrawal of the hugely controversial Mining Charter was a big win, with the new version seeing most stakeholders getting most of what they wanted — but not everything.
Mineral resources minister Gwede Mantashe asked parliament to withdraw the long-delayed amendments to the Mineral and Petroleum Resources Development Act, which were seen as one of the key sources of regulatory uncertainty. And while he has not put anything in writing, Mantashe has repeatedly said that his department will no longer require empowerment shareholdings for prospecting licences, removing a significant financial burden on companies that plan to embark on risky, expensive rights. Mantashe also acted quickly to try to clean the rot in his department. There is hardly a company operating in SA today without some horror story about licence application delays or other applicants copying their applications unlawfully, or section 54 safety stoppages imposed without merit.
These were the easy pickings. Now the real work awaits. The elephant in the room is Eskom, which Ramaphosa promised will be addressed prudently and urgently. The problem is that regardless of the plan the government comes up with, it will need not only eye-watering amounts of money, but also time. There is no quick-fix for years of inaction and mismanagement.
Ballooning tariffs have added to miners’ woes, and the Minerals Council has warned that Eskom’s proposed increases for the next three years will shutter all but one gold mine in the country. Security of supply has also been of concern, and for mining firms with exploration or expansion plans, access to Eskom power may be the hurdle that proves impossible to cross.
Rest assured that no serious investment dollars will be heading this way before there is not only a plan for Eskom, but significant and definite action. The other certainty is that none of this will happen painlessly. The National Union of Mineworkers promises to greet any plans of unbundling with “militancy and radicalism”. Few pundits would bet against them.
Another tricky problem is the often acrimonious relationship between companies — and the government — on the one side, and mining communities on the other. Mining communities, with the help of nongovernmental organisations and social justice lawyers, are becoming increasingly effective at organising themselves and demanding their slice of the pie.
Xolobeni on the Wild Coast, where the majority of the community has been opposed to mining rights for years, is one highprofile example. How Mantashe, who seems to be pushing for mining in the area, treads those ancestral lands will be carefully watched by stakeholders across the spectrum.
A study released this week by ActionAid found that nearly 80% of residents in mining communities do not feel that they benefit at all from the operations. Even more concerning is that 8% of respondents felt the impact of mining was only negative, bringing sickness, dispossession and damages. This should be of huge concern to companies, which typically invest significantly in social infrastructure. Anyone who spends time in small-town SA would be surprised by the ActionAid findings, as mining towns are generally in a far better state than their counterparts that rely mainly on agriculture and social grants to keep economies going.
The government will have to step up and improve service delivery in communities across the country. That burden cannot, and should not, fall on mining companies alone.
EVEN MORE CONCERNING IS THAT 8% OF RESPONDENTS FELT THE IMPACT WAS ONLY NEGATIVE