SA’S min­ing sec­tor

Finweek English Edition - - INSIGHT -

The av­er­age smart­phone con­tains 16 grams of cop­per. There’s also sil­ver, gold, pal­la­dium, plat­inum and ce­ramic mag­netite switches con­tain­ing rare earths. Then there’s in­dium, ti­ta­nium diox­ide and in­dium tin ox­ide. Feel­ing suit­ably ed­i­fied?

It seems strange in a fi­nan­cial com­mu­nity where 30% of the JSE’s listed stocks are in­volved in the ex­trac­tive busi­ness for the coun­try’s Cham­ber of Mines to be hold­ing sem­i­nars re­mind­ing us of the im­por­tance of the sec­tor.

Yet that’s what the cham­ber has been do­ing. In a pre­sen­ta­tion to the port­fo­lio com­mit­tee on min­eral re­sources last year, the cham­ber’s vol­u­ble head of eco­nom­ics and strat­egy, Roger Bax­ter, spent no less than seven of 30 slides ex­plain­ing the im­por­tance of min­ing to the SA econ­omy.

Although min­ers op­er­at­ing in South Africa pay a quar­terly roy­alty levy com­pen­sat­ing ci­ti­zens for their min­eral pat­ri­mony, the min­er­als are rarely thought of as a na­tional trea­sure. In any event, the cham­ber felt it nec­es­sary to es­tab­lish the Min­ing In­dus­try Growth Devel­op­ment and Em­ploy­ment Task Team (MIGDETT) in 2008 aimed at cre­at­ing a fo­rum whereby in­dus­try, Government and labour could, es­sen­tially, ‘find each other’.

In a pre­sen­ta­tion to an­a­lysts and me­dia last week, Bax­ter said dis­cus­sions at MIGDETT re­gard­ing union re­la­tion­ships and reg­u­la­tory con­cerns about the min­ing sec­tor were ro­bust, but in the main, suc­cess­ful. One won­ders, how­ever.

If MIGDETT was sup­posed to leave Government bet­ter in­formed of the pres­sures in the min­ing sec­tor, that knowl­edge was woe­fully ab­sent when mines min­is­ter Su­san Sha­bangu re­sponded to the pro­posed re­struc­tur­ing of An­glo Amer­i­can Plat­inum’s mines by threat­en­ing to with­draw its min­ing per­mits.

In his pre­sen­ta­tion last week, Bax­ter was again at pains to point out the sem­i­nal im­por­tance of the min­ing sec­tor. The statis­tics are fa­mil­iar ones: min­ing com­prises 19% of SA’s GDP, and 50% of ex­ports; it also pro­vides 1.3m jobs and com­prises 17.2% of to­tal cor­po­rate tax-take.

It also rep­re­sents 94% of SA’s elec­tric­ity de­mand, which be­comes an im­por­tant worry be­cause it’s the min­ing sec­tor that’s im­per­iled again as Eskom strug­gles with a wafer-thin 1.5% re­serve mar­gin. Ev­ery 1% in­crease in the elec­tric­ity tar­iff is an ex­tra R100m in costs to the sec­tor. There­fore Nersa ap­proved a R900m per year cost in­crease, equal to R4.5bn over five years, when it backed a 9% tar­iff in­crease for Eskom.

But Bax­ter was also de­cid­edly up­beat about fu­ture ne­go­ti­a­tions with Government. As one of the lead ne­go­tia­tors for the min­ing sec­tor, he is paid to look pos­i­tively on the fu­ture which is why he told me­dia and an­a­lysts that Government’s res­o­lu­tions at Man­gaung had the in-prin­ci­ple sup­port of the in­dus­try, and that min­ing leg­isla­tive re­forms were “in line with in­ter­na­tional best prac­tice”.

The fact of the mat­ter, how­ever, is that

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