Business Day

No quick fix for mining malady

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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

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