The world is heading for another commodity boom, but without the right political will and execution from the government, South Africa will miss out again, says Paul Dunne, president of Minerals Council South Africa.
“It looks like we’re in for a strong performance in commodities across the world, but under current circumstances we will not be able to fully grasp the opportunity,” says Dunne, who is also the CEO of Northam Platinum.
Inhibiting factors constraining the mining sector and deterring investment need to be resolved urgently, he says. “There are fixes we would like to happen in very short measure, preferably in the coming six months but certainly within a year.”
Top of the list is the Mineral Resources Amendment Bill published in May last year, which the Minerals Council said “publicly and quite firmly” did not support investment or job creation.
The mining industry association had a face-to-face engagement with mineral resources minister Gwede Mantashe and his department in June and submitted a 200-page document listing its “difficulties” with the bill.
“We’re now awaiting a second draft of that bill. We are expecting, quite strongly expecting, that our concerns will have been addressed and that the second draft will be quite different from the first draft in the aspects that we are concerned about.”
The mining industry’s probably the most transformed sector in the country. We embrace the need to transform. But it must be a consistent policy, a known set of rules that are clear, transparent and free from corruption
— Paul Dunne, president of Minerals Council South Africa
The first draft was drawn up and published without proper consultation with the industry, Dunne says. “There was a lack of consultation. That is quite clear.”
This time round the minister has brought the Minerals Council on board and its executives have engaged with the department repeatedly. “Now we’re waiting for the result of that process. However, we are very aware of the potential for being sandbagged, getting a surprise knock from behind. We’re hoping, and I believe, this will not be the case.”
So what does he make of the minister’s strong assertion in his opening address at the Mining Indaba in Cape Town this week that BEE, which the Minerals Council has made clear is a strong disincentive to investment, is here to stay?
“The mining industry’s probably the most transformed sector in the country. We embrace the need to transform. But it must be a consistent policy, a known set of rules that are clear, transparent and free from corruption.”
Dunne says uncertainty is a killer. “When you bring ambiguity and uncertainty and continuous policy changes, that implies risk. And when risk comes into the equation, you inhibit investment.” This means no projects, no development and no jobs, which is devastating for the country because the mining sector is such a large employer.
“We create a serious number of jobs, and these are well-paid jobs. Even at entry level, mining jobs today are well paid, decent work with a very strong economic multiplier.”
Mining is such a key ingredient to the success of South Africa that removing inhibiting factors for mining investment should be tackled urgently. “And policy in an immediate sense is the most important one to tackle if we want to take advantage of the opportunities the world is presenting. We are a commodity country, and the benefits are just enormous for us.”
We need to push government to get it done, and government needs to execute on the promises
— Dunne
Dunne thinks Mantashe understands this. So why has he still not rolled out the new digital cadastre that’s been promised for 14 years?
“The Minerals Council is fighting very hard for this because it’s transparent, it negates the potential for corruption and stops over-pegging, where two people have the same right. Which means it’s very important for exploration.
“We’re not getting our fair share of exploration monies. To attract that high-risk money, we must provide the facilitation that attracts it. That means a sensible, transparent, modern — which means electronic — cadastre.”
He told a ministerial session on Sunday that South Africa needs to accelerate the roll-out of the cadastre “with urgency and speed”.
The minister told the indaba his department was working as hard as it could to improve the licensing system and boost exploration. However, the backlog in applications for mining and exploration permits exceeds 4,000 and the amount spent on exploration in South Africa shrank from R6.2bn a year in 2006 to R781m in 2024.
So is the minister out of touch with what’s going on in the sector?
Dunne says no. “He comes from the mining industry, he knows the mining industry. One must give him credit for that. However, despite his department working as hard as he says, what we require are results. Conclusion on these issues will very clearly help the country, so we must get it done and stop just talking about it.”
He believes the minister listens to the industry and hears them when it comes to urgently needed fixes.
If you don’t explore, you’re effectively harvesting, and harvesting is finite. In other words, you have a declining industry
— Dunne
“I have to believe so because that’s what I see when we engage. But I must be blunt, the proof is in the pudding. We need to get it done now, collectively. We need to push government to get it done, and government needs to execute on the promises.”
There’s not much time, he says.
“With a clear, obvious opportunity which is the broader commodity period we’re entering, surely we must get this done.”
South Africa can’t afford to lose out on another commodity cycle.
“We will benefit, but we want to fully benefit from the commodity cycle in all its glory. Commodities have built the wealth of nations over years, and the nature of this commodity cycle, I believe, is a strong one.”
If there’s no dramatic upsurge in exploration, the consequences for the South African mining sector, which is already in decline, could be existential, says Dunne.
“If you don’t explore, you’re effectively harvesting, and harvesting is finite. In other words, you have a declining industry. From a volume point of view, that is what we have at the moment.”
He says there’s no need for a cabinet sub-committee to drive a turnaround, as has been proposed. What’s needed, and what has been lacking, is political will and execution by the department.
Is the minister’s attitude the problem?
“It’s a conundrum. He knows this industry, he knows what is required, he knows what we want. It’s a question, really, of getting it done. It’s simple execution. Let’s move it along now, you know.”
Business Times
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