Chamber of Mines CEO Roger Baxter fires broadside at Zwane
Significant corruption claims against Mosebenzi Zwane and the Department of Mineral Resources have not been cleared, the Chamber of Mines CEO says
Speaking on an international stage, Chamber of Mines CEO Roger Baxter fired an extraordinary broadside at Mineral Resources Minister Mosebenzi Zwane, saying there were “significant corruption allegations” against him and the industry had lost confidence in him.
Zwane, who rose from political obscurity as Free State agriculture MEC to become the political head of the Department of Mineral Resources, operates under a pall of impropriety and stands accused by the chamber of sidelining it during negotiations to draw up the third version of the Mining Charter, deepening the sector’s unhappiness with the uncertain and increasingly adverse regulatory environment.
Mining companies had essentially frozen all investments in the country, Baxter said at the Africa Down Under mining conference in Australia on Friday, a day after Zwane addressed the same gathering.
Both Zwane and Baxter’s presentations did nothing to change a growing perception that SA was a far from ideal investment destination.
“Other than Errol Smart’s Prieska copper project, which is part of the Orion Minerals company, I have yet to find an Aussie miner for whom SA is not on the no-go list alongside the Central African Republic, Somalia, South Sudan, Zimbabwe and now Tanzania,” said a South African delegate at the conference.
“I have heard from a nameless industrial mineral producer here in Australia that theyhave experienced increased inquiries as customers start switching from SA to competitor suppliers as the risk of interrupted supply and possible nationalisation or expropriation in SA has materially increased,” the delegate said.
Baxter did not shy away from the tension between the industry and Zwane, which has sharply increased since the minister gazetted the third version of the charter, prompting the chamber to approach the courts to interdict it.
Zwane has suspended the Mining Charter pending the judicial review of the document, which the chamber says violates the Companies Act and the Promotion of Administrative Justice Act. The interdict will be heard on Thursday and Friday.
Zwane has been linked via various e-mails leaked from the Gupta family to a number of unsavoury events.
His involvement in securing the Optimum colliery from Glencore for the Gupta-owned Tegeta Resources raised questions about his suitability as the mineral resources minister.
“Significant corruption allegations against the minister and the Department of Mineral Resources have not been cleared, and the proposed judicial commission of inquiry into state capture has not been established,” Baxter said.
He was referring to recommendations by former public protector Thuli Madonsela in her State of Capture report, which detailed the Guptas’ involvement with various ministers and officials of state-owned enterprises to secure contracts and revenue streams.
The leaked e-mails have shown in detail the flow of huge amounts of cash from dubious deals into Gupta-related accounts in the Middle East.
The minister, who addressed the conference on Thursday, said the investors, both foreign and local, he had spoken to about the new charter were willing to comply with it.
“The charter is law and all rights holders in SA are expected to implement it,” Zwane said in prepared comments.
This prompted one delegate, who declined to be named, to say that Zwane was out of touch, seeing that he had suspended the charter indefinitely until the case around it was concluded. Zwane did not comment on the cloud of impropriety that surrounds him.
In June, when he released the charter, he said he had been too busy to follow media reports of improper behaviour and would, in time, address the issue.
Baxter went on to list the key issues that were creating a crisis in the local mining industry, including the “unilaterally imposed” charter; a proposed moratorium on the issuance and transfer of mineral rights; ongoing arguments about ownership elements of the previous two charters that are now before the courts; and the “inappropriate” imposition of safety stoppages.
Real mining GDP of R226bn in 2016 was less than the R242bn of 1994, as the country transitioned from apartheid to democracy. The industry had made an accumulated R50bn loss in 2015 and the department “has provided no assistance to help the industry through the crisis”, Baxter said, pointing out that 65% of the country’s platinum mines were unprofitable in 2017.
“The economic opportunity cost of the failure to get the policy, legislative, administrative and operating environment right to promote investment growth, transformation and job creation in South African mining is material,” Baxter said.
The uncertain environment, particularly under Zwane’s leadership, was making it difficult to do business in SA. “In essence, there is a freeze on investment — it is extremely difficult to get an investment committee to approve any new greenfields project in SA,” Baxter said.
“This is a resilient industry. Its stakeholders — including business, the government, unions, communities and civil society — have reached a precipice in the past, but then realised that mutually agreeable solutions are possible.
“But this will require ethical leadership and a focus on the national interest by all parties,” Baxter said.