Neal Froneman, CEO of Sibanye-Stillwater, one of the world’s leading precious metals producers, says Gwede Mantashe’s “ill-advised” threat to withhold minerals from the US could trigger a retaliatory response from President Donald Trump.
“This is just another example of our government antagonising a very, very important trading partner. Our minerals make no difference to the US so it’s no skin off their nose if we withhold them. They’re not dependent on our critical metals. We need their markets far more than they need our minerals.”
Mantashe made his threat at this week’s mining indaba in Cape Town after Trump threatened to cut funding to South Africa because of its recently enacted Expropriation Act.
“It could trigger a blanket retaliation against South African metals and minerals so we would then be caught in that net. Our industry cannot afford this kind of reckless grandstanding from the minister of mining.”
Sibanye exports platinum group metals to the US, where it has good relationships. Its Stillwater plant in Montana is a strategic producer of platinum and palladium.
“The US is almost self-sufficient when it comes to PGMs, based on what we produce at Stillwater and the recycling that takes place in that country. They’re certainly not dependent on PGMs from South Africa.”
As for the impact of the expropriation legislation on the mining companies, “it may well be somewhat smoke and mirrors, but it’s the message that we send. We are trying to create an investor-friendly environment.”
Mantashe told the indaba that a new mining cadastral system would be up and running by midyear. His inexplicable delay in bringing in a modern online system years after other less-resourced African mining jurisdictions have done so has been catastrophic for South African mining, says Froneman.
“A cadastral system allows mining exploration to take place. If exploration is not happening — and it is not happening — because of poor systems and poor administration, it curtails the growth of the mining sector.”
He says even if you believe the minister this time, the new system will not be a game changer unless other constraints are addressed.
You can have the best cadastral system in the world. I don’t think it’s going to make an ounce of difference in South Africa until we get the fundamentals right
— Neal Froneman, Sibanye-Stillwater CEO
“You can have the best cadastral system in the world. I don’t think it’s going to make an ounce of difference in South Africa until we get the fundamentals right. And those fundamentals you can sum up as an environment where people are willing to risk money.”
A cadastral system is putting the cart before the horse, he says.
Major constraints on investment such as policy uncertainty, red tape, BEE regulations, crime, Transnet and water, need to be addressed with urgency. Energy was on the list until recently, but load-shedding has eased thanks in part to mining companies such as Sibanye generating their own electricity.
“Where there’s [public-private] collaboration you’re seeing progress, green shoots in logistics and in crime and corruption. We now have a police minister [Senzo Mchunu] who actually takes action,” says Froneman, who co-chairs the business-government workstream on crime and corruption.
In spite of evidence to the contrary he insists they are making a difference.
“We haven’t seen the impact yet. It takes exceptionally long for the wheels of justice to be effective, but I’m confident that this year you’ll see outcomes that will reflect the progress we’ve been making behind the scenes.”
Meanwhile, crime remains one of the biggest disincentives for prospective investors. Collaboration between the mining sector and the police is still “not optimal” but he has faith in Mchunu, who he says has been “a big improvement on his predecessor”.
“I’ve been very impressed with his focus. He knows exactly what his priorities are and how we as business can assist him, and that is not just with money but with capacity and skills.”
Mantashe spoke at the indaba about a review of minerals legislation. Froneman suspects that instead of addressing the constraints that are holding back investment in mining, his review will make the industry less competitive.
“I think when he talks about a review of the act, it’s not a review to make it more competitive but to include more bureaucracy and more transformation. When you look at how badly we stack up in the latest Fraser Institute mining survey, it’s because of a lack of competitiveness compared with our African neighbours and the rest of the world.”
The institute’s 2024 survey ranks South Africa at 62 out of 86 mining jurisdictions; Botswana is at 15.
We constantly stab ourselves in our foot by saying investor-unfriendly things, even though the underlying issues such as land redistribution are acknowledged
— Froneman
“If the minister is reviewing it to improve its competitiveness by cutting red tape and so on that would be very welcome. But I’m not sure that’s what he’s implying...
“It doesn’t sound to me like it’s going to be less bureaucratic; it’s going to be more bureaucratic, impose more state control and more transformation. Transformation is important but you’ve got to start by being more commercial, and transformation follows. Otherwise you’re not left with a sector. We’ve got to change the emphasis and be more competitive, then there’ll be more transformation.
“But the state doesn’t trust business to do transformation without prescribing it. And I think 30 years later that’s been shown to be completely wrong.”
Laws such as the Basic Education Laws Amendment Act, National Health Insurance and the Expropriation Act, which show “more and more” state intervention and control, don’t bode well for Mantashe’s review of mining legislation, he says.
Froneman is not optimistic about the mining industry getting back to its previous volumes any time soon, if at all.
“We have the resources, we have the infrastructure, we have the skills base, we have the right attitude towards mining. But it’s the policies that are letting us down. Constantly changing policies, incorrect policies, plus ongoing logistics constraints and crime and corruption and so on.
“Unless this changes we can forget about investment flowing into the industry,” he says.
“We constantly stab ourselves in our foot by saying investor-unfriendly things, even though the underlying issues such as land redistribution are acknowledged. We make really bad legislation that is completely unacceptable in the Western world, that cuts across all ownership rights, whether land or shares.”
The government can protest as much as it likes that its intentions are noble, Froneman says, “but the message such legislation sends out impacts negatively on investor sentiment and impedes economic growth”.
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