The su­per­cy­cle is long gone

CityPress - - Business -


“We have a na­tional in­fra­struc­ture plan that was shaped by the min­ing boom, largely to get new lo­gis­tics and elec­tric­ity to these mines,” said Makgetla.

“A lot of the in­fra­struc­ture projects were based on the idea that you would be sell­ing to the mines, and that would be the first source of rev­enue. With the end of the boom ... many of those projects be­come non­vi­able.”

The post-apartheid shift to “user-pays” in­fra­struc­ture re­moved out­right in­fras­truc­tural sub­si­dies for the in­dus­try.

Govern­ment’s spend­ing on in­fra­struc­ture had tended to fol­low the un­sus­tain­able boom in min­ing, said Makgetla.

“One of the things I find kind of dis­tress­ing is that if you look at in­vest­ment as a share of gross do­mes­tic prod­ucts, it cor­re­lates closely with com­mod­ity prices. I was in the pres­i­dency when this was hap­pen­ing. We all thought we were do­ing a shift to the left and pro­vid­ing stim­u­lus to the econ­omy. Ac­tu­ally, we were be­ing to­tally pro-cycli­cal.”

Who’s do­ing the min­ing

While the level of black own­er­ship re­mains a bone of con­tention, there has al­ready been a rev­o­lu­tion­ary change in the struc­ture of the in­dus­try.

Mas­sive chunks of the in­dus­try had be­come lo­cally owned as multi­na­tion­als first di­vested their gold mines and then seemed set to do the same with plat­inum, Makgetla said.

“Be­fore 1994, you had com­pa­nies that were for­eign owned but trapped in South Africa be­cause they were not al­lowed to take their money overseas. As soon as the bor­ders were open, they said they were ac­tu­ally global min­ing com­pa­nies and were go­ing to go where the min­ing was prof­itable.

“They ba­si­cally sold their gold as­sets and cherry-picked what they wanted in South Africa.

“From 2004, the gold min­ing com­pa­nies were taken over by lo­cal com­pa­nies. I don’t know how many peo­ple un­der­stand that it is now only lo­cal com­pa­nies that mine gold.” This shift made a dif­fer­ence, said Makgetla. “If you are a South African com­pany, you are not go­ing to sell your mines and move else­where. In­stead, they up­grade the tech­nol­ogy so the mines will sur­vive for longer. Whether that is good for the coun­try or not is some­thing we can de­bate, but they put more ef­fort into keep­ing min­ing go­ing.”

Sibanye Gold has now taken over the largest gold mines and the largest plat­inum min­ing com­plex in the coun­try from UK-listed com­pa­nies Gold Fields and An­glo Amer­i­can Plat­inum, re­spec­tively.

“We now have lo­cal com­pa­nies with a real in­ter­est in sus­tain­ing min­ing in the long term,” said Makgetla.

“At the same time, what do we ac­tu­ally want from them?”


DUSTED A watch­man stands guard next to a de­com­mis­sioned gold mine head­gear near Jo­han­nes­burg. Mines need to plan for the fact that the com­modi­ties su­per­cy­cle will never re­turn

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.