S.Africa govt and mining industry tensions dominate ‘Indaba’

February 9, 2017
Shares
Last year a court said safety officers acted disproportionately when operations at an AngloGold Ashanti gold mine were suspended over violations in a single section of the mine/AFP

, CAPE TOWN, South Africa. Feb 9 – South Africa has advertised it is “open for business” at the world’s largest annual mining conference, but industry players worry regulatory confusion could prevent the country from cashing in on the bull years that may lie ahead.

After mineral resources minister Mosebenzi Zwane told the Mining Indaba in Cape Town that rising commodity prices marked the start of “a new spring”, Neal Froneman, chief executive of the Sibanye mining company, said that “the investment appetite is very negative.”

Overview
  • Also looming is a rejig of the country's mining charter, the guiding document meant to transform the industry and address long-standing racial inequality in the sector by boosting black ownership.
  • Industry representatives at the Indaba repeatedly said they had not been adequately consulted in the drafting of the charter.

Analysts and miners have decried a regulatory environment that they say has hit investment and forced industry and government to slug it out in court.

Sibanye is taking the government to court for about 26 million rand ($1.9 million) after one of its platinum mines was completely shut down following a fatal accident in September.

Last year a court also said safety officers acted disproportionately when operations at an AngloGold Ashanti gold mine were suspended over violations in a single section of the mine.

“When you end up closing an entire mine when you’ve got a localised problem, the economic damage of that is significant,” said Chamber of Mines CEO Roger Baxter.

But Zwane has insisted he will not compromise on safety standards and slammed mining companies for “threatening” his department with court action.

Minister chides industry

There were 73 deaths in South African mines last year, down slightly from 77 in 2015.

“Courts should not be used as a tool to stifle debate and threaten government into taking positions,” Zwane told journalists at the conference. “We’ll take positions. We are here to govern. And we’ll do exactly that.”

Speaking to AFP on the sidelines of the conference, his deputy was more diplomatic.

“We’ve got to be fair and reasonable,” said Godfrey Oliphant. “If there’s any citizen who feels that they were unreasonably stopped, they’ve got the right and recourse to come to the department or to take court action.”

Turning to the courts was the “last resort” for Sibanye, Froneman told AFP.

“You can engage so much and for so long. You can even make proposals as to a protocol for how these things must work. When you receive no response, you are actually only left with no alternative but to take the issue regarding the damages you as a company are experiencing to court.”

It was not a knee-jerk reaction to one stoppage, but a series that had caused Sibanye “unnecessary damage and we’re not going to to tolerate it anymore”.

Also looming is a rejig of the country’s mining charter, the guiding document meant to transform the industry and address long-standing racial inequality in the sector by boosting black ownership.

Industry representatives at the Indaba repeatedly said they had not been adequately consulted in the drafting of the charter.

Not so, said Oliphant.

“Consultation has been extensive,” he stressed.

This week a Johannesburg law firm took the issue to court, arguing the proposed charter be declared invalid.

Mining means jobs

Tension between the government and the mining industry — a key jobs provider — was palpable at the Indaba.

“The Chamber of Mines is not the only stakeholder in South Africa that is affected by the mining charter,” Zwane said. “The majority of the 60 stakeholders that we have consulted with are very happy.”

Meanwhile, amendments to key mining legislation have been stuck in parliament for four years.

“This industry absolutely requires regulatory certainty,” said Baxter. “Four years down the road is just too long. The industry cannot wait this long for these bits of legislation.”

The minister announced the latest version of charter will be published next month, while the long-awaited legislation should be passed come June.

Until it is, analysts say the uncertain regulatory situation could mean South Africa fails to benefit as markets pick up.

“It’s all stick and no carrot,” said mining analyst Peter Leon.

He said the government needed to start incentivising the industry if it wanted to attract investors.

“We need to move away from this obsession around regulation to one which is a more enabling environment.”

Mining contributes about eight percent to South Africa’s GDP and accounts for some 400,000 direct jobs.

The country has an unemployment rate of about 27 percent, a 13-year high.

Shares

Latest Articles

Stock Market

Most Viewed