That SA is like the proverbial frog whiling away its time in water brought gradually to the boil is immediately apparent when hearing what other countries are doing with their mining industry, environment and power sources.
Whereas government officials in SA hug themselves in ill-justified satisfaction when a mining company says it’s investing in its local mines or a new project, those occasions are rather scarce.
Consider this. Chile expects 19 new mining projects over the next few years with an investment of $20bn or nearly R300bn and creating 30,000 new jobs, adding to the 240,000 people already employed in the sector.
SA’s resources entail a much broader scope of minerals than those in Chile, which are mainly copper and lithium, with relatively good infrastructure, a century of mining history and a broad skills base.
It’s hard not to think of what might have been in SA if the stars aligned on mineral regulation, a governing party that is not historically hostile to mining, reliable and cost-efficient electricity supplies, and functional municipalities.
On the point of hostility, it is one that SA’s mineral resources & energy minister Gwede Mantashe has conceded, noting he has to fight mining’s corner in the ANC-led government, arguing with his fellow ministers that it is a valuable industry that must be protected and nurtured.
While Mantashe says this, it’s hard for an outsider to see the love.
Bear in mind the shambolically bad and disinterested address by President Cyril Ramaphosa to attendees of the Mining Indaba virtual event in February and then Mantashe’s rambling address to the PGMs Industry Day a few weeks ago.
These are the two figures international investors in SA’s mining sector watch closely, particularly now that Ramaphosa is spearheading an economic revival he announced in October 2020 as the country reeled under the consequences of a strict Covid-19 lockdown.
These are the two people who should, by any stretch of the imagination, be urging investment in mining and bending over backwards to make it happen.
Admittedly, there is a great deal of excitement when a company announces a project, which invariably tends to be brownfields, a term used to describe work on an existing block of ground that already has a mine on it.
There are precious few greenfields or new, freshly found resources brought into development.
Now, this is not something new and it’s something explored and discussed at length in these columns.
The revelation of just how pitiful SA’s mining environment and general governance is was thrown into sharp relief this week during a copper conference held virtually from Chile, the world’s largest source of the metal.
The mines minister, Juan Carlos Jobet, young, energetic, articulate and comfortably authoritative, addressed key concerns the industry had in a no-nonsense way and did his best to allay anxiety over discussions about the imposition of a royalty on top of the existing tax regime.
At no point did he indulge in political or ideological rhetoric, place demands on mining companies or indulge in barbed remarks about ownership, history or outright attacks as has been the case in the past two decades in SA when mines ministers have used public and sometimes international platforms to castigate domestic mining companies.
Verbal assault
A pertinent recent example of this was the extraordinary verbal assault on Sibanye-Stillwater by Mantashe at a junior mining conference in November 2020, accusing the company of “stealing” empowerment credits for its gold division and berating it for speaking publicly about its empowerment levels.
How different it was in the copper conference.
The only point of heels being kicked in was about an “unconstitutional” proposal under discussion in Chile’s Congress, a matter Jobet said the government was unequivocal about rejecting.
“We believe that the structure of the specific mining tax currently in place is adequate, and the best way to increase government revenue from mining is to increase production and improve competitiveness,” he said.
In other words, let mining companies do what they need to do to operate profitably and generate more money and by extension more money for the fiscus. No unnecessary, unhelpful meddling by politicians.
The underlying success of Chile’s mining industry and its dominance of global copper production lies in its regulatory and fiscal regime, some of which is enshrined in the country’s constitution.
The Chilean Chamber of Mines’s chair, Diego Hernandez, said there had been three decades of stability in these areas, which had fostered growth and investments in mining.
SA has had three relatively quick changes to its Mining Charter policy that underpins the award of mining rights and stipulates companies’ obligations in the areas of transformation, ownership, labour and social interactions and procurement of goods and services.
It is highly prescriptive and has changed roughly every five years, moving the targets ever higher and becoming more onerous to meet, creating an unsettled air among mining investors, and prompting the Minerals Council SA to approach the court to contest parts of the 2018 iteration.
The industry is clear to Mantashe and the government. The charter cannot be changed every five years and targets moved higher.
Investments in mining are long term and large and cannot be subject to the whims of a sitting minister and his or her departmental officials who then legitimise their ideological changes to key documents like the charter by engaging in wide consultations with communities and labour, which will obviously back these changes, and declare them part of a broad popular mandate.
After a decade of messing about and trying to amend the key Mineral and Petroleum Resources Development Act (MPRDA), Mantashe scrapped that idea as a bad job, much to the relief of the industry, and is now talking about splitting energy — oil, gas and petroleum — from the act and setting out two acts.
The Chilean government is actively pursing renewable energy and water desalination projects to make mining as green as possible.
SA could do a lot worse than look across the Atlantic and see why Chile is attracting 19 new mining projects, tens of thousands of new jobs and strong foreign investment in its mining sector. There is so much positive that can be learnt if there’s a willingness to concede you are not holding a superficial high ground that stands in the way of investment, job creation and wealth for an entire country.
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