The supercycle is long gone
“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