Roger Baxter’s miner challenge

Roger Baxter’s appointment as CEO of the Chamber of Mines might have surprised some, but the former COO has worked with the Chamber for much of his career. Giulietta Talevi caught up with him

Q Is making the South African mining sector attractive to investment one of your tasks as the Chamber’s new CEO?

A One of our primary functions is to create as conducive a policy, operating and labour environment as possible.

What’s really important at the moment is agreement from government’s side that [they] will work to a “mining lab”. In other words, they are going to apply Project Phakisa to the mining sector. It looks at all the constraints affecting the sector’s ability to grow, to attract investment, to achieve its potential, and those plans are developed in this lab process.

Q What would you say are the major constraints? Isn’t government one of them?

A The exogenous things we can’t change. [Domestically] we’ve got regulatory issues that need to be resolved, for example the Mineral & Petroleum Resources Development Amendment Bill that has been sent back to parliament. We will try to make sure that whatever comes out of the process is conducive to attracting and growing investment in SA.

The same on the mining charter declaratory order process with the department of mineral resources (DMR), which is to try to define greater certainty. And then we’ve got some very specific issues around electricity, rail and export facility capacity.

This mining lab process is important [in] creating that gel that holds the collective together. If you don’t have electricity you can’t grow. If you have regulatory challenges or policy uncertainty it creates further challenges. If you have labour market instability, you have even further challenges.

Q Do you think the mining companies have been unfairly leaned on to cut output, simply because they had the systems in place to deal with the power shortage since 2008?

A That’s right. The large industrial customers, of which mining and the refining and smelting industries are a substantial part, have been unofficially load-shed since 2007, and that’s been continual all the way through to 2015.

The big industrial users have carried the burden and they don’t get much credit for doing so. But now the pain is being shared in the rest of the economy. Pointing is not going to help us. How do we as team SA help get Eskom back on track? That means creating the room for them to get their maintenance right.

But then also to have the conversation about bringing greater private sector generation on stream so we have a more diversified, less risky basket of power supply into the network. Without electricity we can’t grow.

Q SA failed to take full advantage of the last boom in mining. How might the Chamber make sure that doesn’t happen again? And do you think that supercycle will be repeated?

A My perspective is that we do go through commodity cycles and we do go through periods of depressed prices, so we mustn’t be fixated on the short term. Yes, there are challenges in terms of pricing but in due course cycles will turn, economies change and so on. Assuming the next commodity cycle starts its uptick in the next three to five years, what are the things we need to attract the necessary investment to grow our businesses, to export our product to the global marketplace, to ensure there’s sufficient domestic supply?

We’ve made some progress around the regulatory issues but we have a lot more work to do to have the policy and regulatory certainty which enables us to take things forward. For example, on the environmental permitting side, government has put in place a one permitting system, administered by the DMR. That’s a demonstration of the progress … to make sure we have smart tape, not red tape.

Q What about mining rights? It’s an area that seems to need work — deals have been scuppered because of the DMR.

A Part of the amendment bill that went through parliament last year was trying to rectify some of those challenges. We’re going to have to live with a little bit more uncertainty until that legislation is tabled and properly enacted.

Q Is it going to be a problem for you — especially in your negotiations with government and unions — that the face of mining is white? Does it even occur to you?

A I’ve always had the attitude of looking at myself through the prism of being a South African, as opposed to being a racially classified South African.

I was one of the original negotiators on the mining charter back in 2002. I’ve been intricately involved in the process of transformation. [It’s] not a historically disadvantaged South African thing only: it’s about what all South Africans can do to transform our economy. I’m making a contribution in trying to progress the agenda for getting mining to realise its potential and I hope that will come through in my dealings with government and unions. I think it’s a privilege to be asked to lead the organisation at such a challenging time, but I’m going to be doing it as a South African: no more, no less.

Q One of the criticisms of the mining royalties regime is that the royalties don’t get fed into development in the areas from which they come — they go to the national fiscus. Is that something you would want to change?

A The minerals in the ground are under the custodianship of the sovereign state of SA. The sovereign state represents all people in the country, so if you take a revenue stream from mining and you isolate it just for the mining community, then what about the rest of society that should derive benefit? That’s been national treasury’s argument, but a view from industry [is] that a portion of the royalties should be dedicated to the regions they come from, in conjunction with what the mining companies are trying to do to enhance community development. That’s an argument which treasury has resisted, but I still think it’s valid. But government is not averse, with industry, to funding big tier projects — I guess that’s something to focus on in due course. Mining companies are doing a lot with social and labour plans and government could have played a bigger role in complementing those.

Q Wage talks are coming up in gold and coal. Does Gold Fields’ South Deep wage deal — with increases of up to 21% — throw a spanner in the works?

A The Chamber does voluntary centralised negotiations on behalf of the gold and coal sectors, so none of the parties are compelled to be involved. We don’t normally comment on the individual company but [Gold Fields] is a more mechanised, skills-intensive operation, which is vastly different from a number of the gold mining companies. The companies will work together under the Chamber’s umbrella to try to achieve a pragmatic and economically feasible wage deal.

Q Would you agree with the view that the Chamber doesn’t represent junior and exploration miners, and isn’t doing enough to advance their needs?

A We’ve expanded our membership base to include a lot of emerging companies. I think the Chamber represents more small-scale miners than any other association purporting to represent smaller players.

Over the last couple of years we’ve tried to engage government on things like flow-through shares, to encourage venture capital to be spent on exploration. They’re not keen, but we’ve been doing a lot internally. We have our own mentorship programme where we have retired senior executives giving back their experience and skills to smaller players. We encourage government to adopt the right policies and we’ve established an emerging miners desk.

Picture: THINKSTOCK