ZWANE HURRYING THE MINING SUNSET

The minister of mineral resources Mosebenzi Zwane seems to be living in a time-warp. His statements and actions suggest he is living in the mid-2000s, when the platinum sector was pumping profits and Anglo American Platinum had the same status on the JSE as Naspers does now. Or in the late 1970s, when the gold price rocketed and SA was the world’s biggest producer of the metal. Or the 1980s, when a weak rand and high inflation flattered a mining sector that was still sinking new shafts and paying generous dividends to white shareholders. That’s all gone.

The trouble with Zwane is that he is aiming at a target that disappeared long ago. Once there were dozens of rich gold-mining companies on the JSE. Now there is just a handful of strugglers. Our mining is either declining (gold is running out, platinum faces a collapse in demand as electric cars disrupt the automobile market) or stagnant because of low commodity prices and high fixed costs. Even companies that have done well recently are merely recovering to former levels.

Jobs are being shed by the thousands, and we have a crippling confidence crisis that threatens the very survival of mining in SA.

Mining is a high-risk and long-term investment, so it has to offer the possibility of substantial reward. The corollary is that it demands an environment where there is reasonable policy certainty. Perhaps more than any other sector, mining requires that government and business work together, because neither can control two key factors: commodity prices and currency exchange rates. They might not agree on everything, and healthy tension is not a bad thing, in order to keep government realistic and business sensitive to the broader societal issues, including an unhappy legacy of migrant labour and exploitation. But co-operation and mutual respect are essential. No single body has more responsibility in achieving a balance than the minister.

Instead Zwane has behaved like a saboteur. He has treated the chamber of mines like an enemy. His announcement of a moratorium on corporate activity and on the awarding of new mining rights made no sense to anyone, and was met with outrage by business and unions alike. His case was weak and it was not surprising that he cancelled the moratorium on Friday before a court could rule on the chamber’s interdict application. The withdrawal was then made an order of the court — but huge damage to confidence had been done.

Zwane was also rebuked by judge Ramarumo Monama for not following court procedure. He missed a deadline last week to file an answering affidavit to the chamber’s challenge to the third version of the mining charter. The judge gave Zwane 14 days to submit an explanation for his “utmost disrespect” for court procedures and the constitution by also not filing an answering affidavit to the chamber’s interdict application. When the moratorium was withdrawn, he announced it to the media, instead of informing the court. “If the minister can act like this, what stops ordinary people from doing as he does?” the judge wanted to know. What an embarrassment.

Zwane’s behaviour reflected a dangerous ignorance of the portfolio and of administrative process. Either he has no expert advisers or is not listening to them. There is not even ideological coherence in what he has been doing, beyond an apparent visceral hatred for mining companies.

Mining is by definition a sunset industry. Having Zwane in this ministry means the sun will sink much faster than was necessary.

NO-CONFIDENCE VOTE

Because of the Women’s Day holiday this Wednesday, the Financial Mail went to press a day early. We will, however, still provide you with full online coverage and analysis of Tuesday’s no-confidence vote in parliament. Go to www.financialmail.co.za. We will also carry further in-depth analysis in the magazine next week.