Sibanye turns Marikana legacy around but SA’s slide continues

The year 2012 will forever go down in SA’s history as the year of Marikana. But 2012 was also the year of the first downgrade of SA’s credit rating by Moody’s, which at that point had an A-grade rating on SA. The legacy of one of those events is being addressed to create a new future. The other, not so much. This week saw fairly spectacular interim results from the new owner of the Lonmin platinum group metals (PGM) mines where 44 people were killed in 2012. Precious metals producer Sibanye-Stillwater, which bought the mines in June last year, posted record earnings as soaring PGM and gold prices offset the fact that its South African mines produced at only 50% in the first half of this year because of the lockdown.

The company’s big push into PGMs since 2016 has paid off richly, setting it up as a leading global producer just in time for the prices of “rock-star commodities” such as rhodium, ruthenium and palladium (as well as gold) to take off. But it’s still really odd to hear “Marikana” in a financial results presentation, referring to mine shafts rather than to miners being shot.

Sibanye-Stillwater renamed Lonmin’s East and West Platinum mines Marikana soon after the acquisition. CEO Neal Froneman’s approach has been, essentially, to own the unhappy Marikana legacy and turn it around, wresting from the Association of Mineworkers and Construction Union (Amcu) the control the union had largely taken of it. The group marked the eighth anniversary of Marikana this month with prayer sessions and the handover of six houses to slain miners’ widows — with plans to get the promised houses to all of them by next year, whereas Amcu had handed over one house at each anniversary.

Meanwhile, it has rapidly restructured the long-ailing Marikana mining operations, achieving double the quantum of synergies it promised at the time of the acquisition, with more to come — but

Froneman was this week forthright in making it clear that the government had to make investing in mining attractive.

That Marikana moment in 2012 when police opened fire on striking miners was a defining one because, in a sense, it signalled that the SA of Nelson Mandela was no longer. And for international investors it came as a reminder, if they didn’t know it, that SA remained a deeply unequal and divided society. It happened on the platinum belt. But it could have happened anywhere. The Moody’s downgrade came soon after, in September 2012, starting a process which culminated in March this year when the agency at last downgraded SA to junk status. Depressingly, much of what the agency wrote then could just as well have been written now — only more so. Moody’s alluded specifically to Marikana, citing the more negative investment climate and investors’ awareness of SA’s longstanding socioeconomic challenges. But the dominant drivers of that first, Zuma-era downgrade — which came between the ANC’s controversial June policy conference and its December 2012 national general conference — were the growing evidence that the government was unable or unwilling to do anything about economic growth, and the rapid deterioration in its public finances.

How nice it looks now to have a government debt ratio of just 40% of GDP, though that was already a big concern for rating agencies, which were being promised — with ever-diminishing credibility — that the government would discipline its spending and stabilise the debt ratio. Now, SA sits with a debt ratio that’s expected to hit 86% this year and could rise to sovereign debt crisis levels soon; it has an economy that has grown by just 1% on average since 2012 and will likely contract by more than 8% this year.

It’s not just miners that need to own those 2012 legacies and navigate the difficult politics to a new future: it’s the country. So far, sadly, there’s not much sign.

That moment in 2012 signalled the SA of Mandela was no longer