Neal Froneman on the Mining Indaba’s big misstep
Private assurances undercut by public blunders, says CEO
● Mineral Resources Minister Mosebenzi Zwane should never have been allowed to open last week’s Mining Indaba, says Chamber of Mines deputy president and CEO of Sibanye-Stillwater Neal Froneman.
Foreign investors were looking forward to seeing “the new face of South Africa” that Cyril Ramaphosa had announced at the World Economic Forum in Davos. Instead they got a man facing possible criminal charges for state capture who is blamed for all but destroying the industry.
The indaba attracts investors from around the world.
“It was a wonderful opportunity to showcase the changes in South Africa and improve perceptions, and we didn’t use it,” says Froneman.
“It was a huge missed opportunity.” Allowing Zwane to give the keynote address sent the same confusing signals to potential investors as would a state of the nation address by President Jacob Zuma.
Froneman says it is difficult to overstate the damage Zwane has done to the industry.
“It has been tremendous. The launch of the Mining Charter took more than R50-billion off the market capitalisation of companies.
“Progress around transformation has stalled because there is no legislation in place. We have no exploration taking place because we don’t have a minerals act.”
The Mineral and Petroleum Resources Development Amendment Bill has been dithered over since being introduced in parliament in 2013.
Mining is the “flywheel” of the economy, so the knock-on effects of its problems across other sectors have been extensive.
“Then, of course, the reputational issues. We look like a country where we can’t work with government, which at this stage is almost true.”
The chamber said last week that it was prepared to meet a delegation of ministers including the minister of mineral resources, but Froneman has his doubts.
“I don’t think we can deal with a minister who has negotiated in bad faith and has a huge amount of issues hanging over his head. I don’t know how you can do that.”
Ramaphosa needs to establish “appropriate governance”, he says.
“We need to deal with people who have integrity and negotiate in good faith, as we do. So governance is a critical issue in our minds.
“We want a government that’s got integrity. Until we see that we will not attract the required investment from the capital markets to grow the economy and create jobs.”
This is what investors have been telling him at the indaba.
“They cannot put public money into public companies that are exposed to bad governance.”
He accepts this is not going to change overnight. But there is “good evidence, and not just at Eskom” that the desired changes are beginning to happen.
Informal engagements between the chamber and “well-placed, senior ANC people”, have given him hope — “and you know how sceptical I’ve been”.
“This is the first time in a long time, five to 10 years, that I’ve seen government actually saying to business: ‘What’s going on, what are the problems?’
“This is very new.”
Isn’t he being deluded by the Ramaphosa euphoria?
“There’s a new wind blowing.”
What about the wind that blew Zwane onto the indaba podium?
“What happened at the indaba is one thing, but there are positive green shoots.
“I understand we’re in a honeymoon phase and that actions speak louder than words, but there are very good, positive signs of changes that are occurring.”
Zwane is still there, the charter that the chamber refuses to recognise is still there, and the ill-fated Mineral and Petroleum Resources Development Amendment Bill is still waiting to be signed?
“We need to give the new leadership a chance to make a difference, but I am positive about the interactions I’ve been hearing about and actually experiencing myself with good-quality, well-placed people in Ramaphosa’s network.”
Zwane has not been involved in any of these meetings at all, he says.
Is he implying there is some kind of parallel government?
“What’s clear to me is that there are two factions in the ANC. There’s a portion of government that is actually taking the trouble now, on an informal basis, to . . . they’re telling us they really want to see South Africa move in a different way.
“We’re telling them that we need regulatory certainty, an investment climate that is positive. And that starts with good governance in government.”
He says the window of opportunity that Ramaphosa’s election has opened will not stay open for long.
“If we haven’t made very significant progress within six months, the situation will revert to what it has been.”
The industry has been badly depleted but is not too far gone to be revived, he says.
“We can turn it around, but we’ve got 10 years of hard work ahead of us. The damage has been extensive.”
The hardest thing will be to establish trust, he says.
“The trust deficit is huge. We’ve got a long, long way to go to regain the trust of investors, and trust between business and government.”
Not to mention public trust in an industry that is widely disliked, if not reviled.
He says its toxic image is as much of a threat to the industry as regulatory uncertainty. The hostility aimed at Sibanye after a power failure left miners stranded underground at its Beatrix gold mine in the Free State is indicative of what the industry is up against, he says. He thinks the response was unjustified.
“We kept the miners in a safe place, they were not exposed to any risk.”
While many major companies have sold or are selling their South African assets, Froneman has been expanding his local operations.
“Now we’ve got this huge concrete block round our neck called South Africa and we trade at a discount because of it.”
He believes his faith is about to be rewarded. “We shouldn’t count our chickens before they hatch, but I think the right things are going to happen,” he says.
What happened at the indaba is one thing, but there are positive green shoots Neal Froneman Chamber of Mines deputy president