What Ramaphosa's administration must do to fix mining - IOL

2 March 2018 - ‘Trust is the glue of life. It’s the most essential ingredient in effective communication. It’s the foundational principle that holds all relationships.’ This is according to the late Stephen Covey, known for his self-help and business books, and he is absolutely correct.

Marius Roodt

‘Trust is the glue of life. It’s the most essential ingredient in effective communication. It’s the foundational principle that holds all relationships.’ This is according to the late Stephen Covey, known for his self-help and business books, and he is absolutely correct. Any relationship, whether between friends, husband and wife, employer and employee, or teammates on the sports field, will flounder without a high level of trust. And the current relationship between the Government and the mining industry is no different – without trust, the relationship is doomed to failure.

If President Cyril Ramaphosa wants to rescue the relationship between the mining industry and the Government, his first task will be to rebuild trust. This, initially, will not be hard to do. He has already made the first step by firing the incompetent and compromised Mosebenzi Zwane and replacing him with the national chairperson of the African National Congress (ANC), Gwede Mantashe. 

The appointment of Zwane was an unmitigated disaster, with the Chamber of Mines simply refusing to work with him. He showed little interest in the portfolio, and his appearance at this year’s Mining Indaba in Cape Town was widely considered disastrous. He gave a lacklustre speech, seemingly designed to scare away investors rather than encourage them to put their money into this country.

Until Mr Zwane’s term, post-1994 appointments to this portfolio had been done with some pragmatism. Phumzile Mlambo-Ngcuka was highly regarded by the industry, and, while her successors (Susan Shabangu and Ngoako Ramathlodi) were perhaps not held in the same high regard, they were people whom the industry felt they could work with. It seems that Mr Ramaphosa has once again turned to pragmatism with his appointment of Gwede Mantashe, which has been broadly welcomed by the sector.

Given his history in the industry (both as a mineworker and a trade unionist), Mr Mantashe is likely to understand that mining is not a sunset industry, nor an evil one. The industry may be smaller than it was in its heyday in the 1980s, but it can still continue to play a critical role, especially given the large mineral reserves South Africa still has. Employment in mining can still easily grow should solid policy attract foreign direct investment to South Africa, and, through its various economic multipliers, mining can boost downstream and parallel economic activity, benefiting South Africa as a whole. 

Restoring trust, then, will be an urgent priority for Mr Mantashe.

Apart from firing Mr Zwane, the other important initial step in restoring trust has already been taken, with clear signs that the third Mining Charter is to be scrapped. This will go a long way in starting to rebuild mining, which suffered tremendous harm from what was effectively a unilateral Mining Charter.

Another step that Mr Mantashe must take to rebuild trust is to ensure that his technocrats and other staff are of the highest calibre. Crony appointments must be reversed, and people who understand the mining industry be tasked with making policy. For example, one of Zwane’s most controversial appointments was that of Seipati Dlamini to the post of deputy director-general: mineral regulation, with the power to grant and rescind mining licences, perhaps one of the most egregious examples of the Guptafying of the South African Government. 

Appointments at the level of director-general and deputy director-general must be approved by the Cabinet, which was not done. In addition, the post was not advertised, as required. Ms Dlamini replaced a respected and experienced civil servant, Musa Mabuza, who was shifted to the Council of Geosciences by Mr Zwane. 

When Mr Zwane was appointed as mineral minister, Ms Dlamini was initially his chief-of-staff, and prior to that, she had been the chief financial officer in the Free State Department of Agriculture, when Mr Zwane was MEC. Appointments such as these must be rescinded and the new minister must ensure that advisors and officials in the department understand the industry and aren’t simply facilitators of corrupt interests. 

A further action to build trust will be for Mr Mantashe to meet the CEOs and executives of the mining companies to determine their concerns, better understand what the issues are, and learn how the industry and Government can work together to enable the sector to act as a driver for our economy, instead of allowing it to rot.
We must not forget that mining companies are not the only important stakeholders in the sector. Labour and communities (both those around mines and labour-sending ones) are key stakeholders. 

Trust must be rebuilt with them, as well as between them and mining companies. The sector cannot afford prolonged strikes, nor unrest by communities, which will further damage an already fragile industry. All three of these stakeholders must feel that they can trust the Government and one another if the mining sector is not only to survive but also thrive.

That said, the new Ramaphosa Government is already sending mixed signals about how committed it is to creating an environment in which investors will be happy to put their money. The vote in Parliament, supported by the ANC, to amend the Constitution to allow expropriation without compensation will make any investor shy away from South Africa. No matter how hard Mr Mantashe works to rebuild trust between the Government, the industry, labour, and communities, or works to put forward a Mining Charter palatable to all, if companies and investors are not convinced that their property is secure, there will be little incentive for them to look to South Africa. 

This country is already far behind other comparable countries in how friendly mining policy is. Couple this with a country where property rights are not secure and the mining industry will continue its decline, with all the apocalyptic consequences this will have for the industry and the broader economy.

By sending a signal that South Africa is a country where property rights are not important, Mr Ramaphosa and the ANC will find it difficult to attract any foreign investment, and not just in the mining industry. Mr Mantashe already has his work cut out for him in trying to rescue the mining sector. The Parliamentary vote on expropriation without compensation may have made a difficult task impossible.

* Marius Roodt is a consultant to the SA Institute of Race Relations (IRR).