In trying to envisage the re-industrialisation of the mining industry — as about 40 leaders from the government, state-owned enterprises and top-tier mining companies will be doing at the Joburg Indaba this week — one of the most important questions that will be asked is what we have to do differently.
To do that we need to decipher what got the SA mining sector into the position it is now. The words of renowned economist John Maynard Keynes resonate with me: “The difficulty lies not so much in developing new ideas as in escaping old ones.”
We are enjoying a moment of optimism. The formation and cohesion of the government of national unity (GNU) — however fragile — is an opportunity not to be wasted. We can only hope that our politicians heard the electorate on May 29. All three major parties received a snotklap, as we say in Afrikaans, and there is an expectation from ordinary South Africans that they need to do better.
Do these changes mean anything for mining? I certainly hope so. While some ministerial incumbents remain, there is new blood and perhaps (I hope) a revitalised political will born out of necessity.
These are the discussions we have to have now: will we have to live with the certainty of bad policy or is there any upside to be gained from policy adjustments that make SA more investor friendly? After five years of promises, can we be assured that the cadastral system will be put in place without delay?
Despite announcements of a cadastral system launch in February, mineral & petroleum resources minister Gwede Mantashe said in July that the migration to the new cadastre would be completed only by June next year. Can we then finally stop talking about it so that we can actually attract investment into exploration?
Are we prepared to contemplate that the people who bring the risk money should be adequately rewarded for their investment? How do critical minerals feed into our future planning? Can we talk frankly about the role of the Competition Commission in slowing and stalling transactions? Will our economic policy consider that an unrealistically strong rand is a double-edged sword for mining?
We need to have serious conversations around beneficiation. Is the debate just different terminology for the same conversation we have been having for years, or are we really understanding that there is an opportunity to produce the critical minerals the world needs?
And let’s be clear about what we mean by re-industrialisation. At its core, re-industrialisation is about the economic, social and political process of organising national resources for the purpose of revitalising and modernising ageing industries and encouraging new ones. Mining can be both.
Re-industrialising doesn’t mean setting up smelters that use power Eskom cannot supply, or setting us up to compete with China, which we cannot do. But it does mean mobilising resources to encourage local investment in people and assets, to grow the economy as a whole.
Mining is a fantastic foundational industry. Substantial resources exist in SA. While some of the earlier sectors will continue to reduce output, the growth potential for critical new minerals is extensive. We have plentiful skills, including from those sectors seeing retrenchments. And in a world of rising geopolitical risk affecting mining jurisdictions, perhaps SA is not as risky by comparison. But we undermine this through political patronage. Why can’t we just be more commercial in our international relations? Do we have to take stances on the international stage that will have the effect of sidelining our trading partners and investors?
We need our key state-owned enterprises — Eskom and Transnet — to account for the progress made in establishing the public-private partnerships we have been speaking about for years. Are they solving their problems by actually doing things with the longer term in mind, or are they simply stranded assets, fantasising about solving their problems through cost-reflective tariffs? You can’t, as a monopoly, mismanage and then simply pass the cost on to the mining sector, because these are significant input costs.
The CEOs of top-tier mining companies also need to openly share the issues they are most concerned about. I don’t think confrontation and warfare through newspaper articles is the way to engage with social partners, but we also don’t want these discussions to happen only privately in smoke-filled back rooms.
Senior mining leaders need to tell us how their views on geopolitics are shaping their investment decisions, or whether the glimmers of hope presented by the GNU will influence their thinking. What are the issues hindering investment decisions and what are the issues they stand firm on? Honest engagement is critical.
While we are clearly part of the African continent, there are circumstances that make our mining industry unique and many of them are strengths. I am inherently optimistic and bullish, and like most South Africans I believe our mining executives are too. So, let’s have these frank discussions. Let’s talk about the tough issues, and hopefully by broadening our horizons we can get new ideas of how to address them.
The world needs to know the SA mining industry is not hiding in dark corners. It’s neither a sunset industry nor a sunrise industry. Depending on certain factors, some prospects are fantastically good, while others may be struggling (for now). But nothing will damn our industry more than being silent and allowing ourselves to become irrelevant.
• Swanepoel, a former mining CEO and director of mining companies, is convener of the Joburg Indaba.
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