After mineral resources minister Gwede Mantashe blindsided the industry last week with a set of investor-unfriendly legislative amendments, some tried to find the positives.
One, mentioned by Valterra Platinum, relates to the social and labour plans that mining companies have to invest in to attain and retain their licences.
The department’s amendments propose that mining companies should be able to collaborate to implement infrastructure projects in their communities, such as hospitals, at scale, instead of competing to develop smaller and more fragmented projects.
That could make the large amounts of money mining companies have to spend to comply with their social and labour plans more impactful. And since they mostly want to invest in the communities around their mines anyway, and they do, they have been keen on the idea.
The devil is in the details, of course. But it may be one straw to clutch at. It does not, however, make SA’s mining industry any more attractive for new investment than before. Nor, on the evidence of the proposed amendments, does Mantashe have much interest in so doing.
The amendments have been compared with the chilling measures proposed by state capture mining minister Mosebenzi Zwane in 2017; they certainly seem, at first glance, focused on enabling more rent-seeking than enabling more investment. Mantashe can call it transformation or BEE, but the record of the government trying to extract ever more out of a shrinking industry speaks loudly.
One of the glaring issues that stands out in the latest version of the Mineral and Petroleum Resources Development Act amendments relates to the “once empowered, always empowered” principle. That is the idea that once a mining company has done an empowerment deal and complied with the requirements of the Mining Charter, it doesn’t have to keep doing deals repeatedly every decade or two as existing deals mature and BEE partners cash in their shares.
Mantashe’s department humiliatingly lost a series of court battles with the industry over this in 2021, with the courts upholding the industry’s view that once empowered was indeed always so.
Now it appears to be trying to smuggle the “never quite empowered” approach in via the back door of simply replacing the Mining Charter with the BEE codes. If investors have to endlessly give away equity to new waves of empowerment partners, the hurdles to investing in SA’s mining resources become too great, no matter how rich those resources may be.
Then there is the absurdity of insisting that prospecting rights, too, will depend on BEE partners. The prospectors haven’t even found the stuff yet, and they already have to dilute their interest by bringing what are likely to be nonpaying partners. Why bother to prospect or explore for new mineral resources at all? As it is, SA some time ago fell to less than 1% of global exploration spending, and there it has remained.
That has a lot to do with the department’s spectacular failure over more than a dozen years to deliver the kind of modern, online cadastral system that almost every other African mining jurisdiction has up and running. Now, SA’s new cadastral system seems finally on its way. But unless the conditions for exploration and investment are made attractive, there still won’t be any.
The government of national unity at least claims to be more market-friendly than the previous ANC government and more focused on making SA more investible to lift economic growth and job creation.
But Mantashe is clearly not on the same page. And President Cyril Ramaphosa doesn’t even seem to try to rein him in. SA is losing out on huge opportunities as a result.
And while miners can’t move without their regulators in this tightly regulated industry, what they can do is move out of SA altogether if the environment is not conducive. Several have done just that.
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