SA’S mining sector
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