Sibanye-Stillwater, one of the world’s biggest precious metal miners, has warned that SA business will need to step up efforts because of the government’s slow progress with reforms, which are insufficient to lift economic growth and reduce social discontent.
Without decisive measures to root out corruption, instil ethical leadership and implement meaningful structural reforms, the sociopolitical context will become more challenging, Sibanye said in its 2021 annual report.
“Anticipating continued weakness in state capacity for delivery of public services, we foresee an increasing need for private sector-led initiatives to compensate for these shortcomings in order to sustain a stable society in our operating areas,” it said.
The mining heavyweight’s blistering attack comes almost nine months after SA’s image as a safe destination for private capital took heavy blows from violent unrest in July when roving mobs in KwaZulu-Natal and Gauteng looted and set alight commercial buildings.
“With the future direction of political ideology uncertain, we have limited expectations for a regulatory framework that is more favourable to business competitiveness and conducive to investment,” the report says.
While there has been some progress, including the introduction of the 100MW licence threshold for private generation, the 51% sale of SAA and attempts to fix Eskom, “meaningful structural reforms to create a competitive, business-friendly climate are limited”.
Sibanye generated a record R33.1bn in profit in its 2021 year, paying R13.8bn in dividends while also forking out R17.2bn in royalties and taxes, in SA and the US, which is almost enough to cover the budget of the department of home affairs twice.
Sibanye employs almost 85,000 people at its SA and US operations, with more than 80% of its production coming from SA. The company paid R26.2bn in wages in 2021, up 10% year on year, and is in the midst of a labour dispute at its gold operations, where more than 20,000 members of the Association of Mineworkers and Construction Union and National Union of Mineworkers have been on strike since March 9.
SA is enjoying the fruits of a global boom in commodity prices, which has resulted in state revenue overruns, while the inflow of dollars has also helped support the rand, providing a cushion for the cost of imports and easing inflationary pressures, even as global energy and food prices soar.
Despite this, SA miners continue to report that production is hobbled by dysfunction in the rail system and by Eskom blackouts, while community protests often disrupt employees’ transport to work, which also forces mining houses to spend more on security.
Notwithstanding 2021 being an election year in SA, which can often intensify grievances around service delivery, there was a decrease in protests targeted at the company, Sibanye said on Friday.
Key drivers of community dissatisfaction are procurement and recruitment opportunities, the company said.
“Shortcomings in the delivery of basic services and administrative functions represent an ongoing drain to our operations. This is compounded by a regulatory environment that is not attractive to investment.”
Despite the increasing risks posed by SA, Sibanye said it was able to justify the approval of three major capital projects in early 2021 totalling R6.3bn, expected to provide 7,000 jobs.
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