EDITORIAL: Ramaphosa ticks all the boxes at mining indaba, but huge challenges lie ahead
Delegates at the 25th Mining Indaba left Cape Town somewhat more optimistic about the state of SA than they have been in a number of years.
Cyril Ramaphosa, the first sitting president to address the conference, had a packed conference hall and spillover rooms eating out of his hand. His administration picked some low-hanging fruit in the mining industry shortly after coming into power a year ago, earning him much-needed goodwill among mining companies and investors.
The withdrawal of the hugely controversial Mining Charter imposed by former mineral resources minister Mosebenzi Zwane in 2017, which led the Minerals Council SA suing the government, was a big win, with the new version seeing most stakeholders getting most of what they wanted — but not everything. Leaving no party completely happy at the signing ceremony is probably the best sign of a relatively fair outcome for all.
The elephant in the room is, of course, Eskom, which Ramaphosa promised will be addressed prudently and urgently.
Mineral resources minister Gwede Mantashe asked parliament to withdraw the long-delayed amendments to the Mineral and Petroleum Resources Act, which were seen as one of the key sources of regulatory uncertainty hampering investment in the sector. And while he is not put anything in writing into the charter or regulations, Mantashe has repeatedly said that his department will no longer require empowerment shareholdings for prospecting licences, removing a significant financial burden on companies that plan to embark on risky, expensive rights.
Mantashe also acted quickly to try and clean the rot in his department. There is hardly a company operating in SA today without some horror story about licence application delays or other applicants copying their applications unlawfully, or section 54 safety stoppages imposed without merit. These were the easy pickings. Now the real work awaits.
The elephant in the room is, of course, Eskom, which Ramaphosa promised will be addressed prudently and urgently. The problem, however, is that regardless of the plan the government comes up with for the struggling utility, it will need not only eye-watering amounts of money, but also time. There is simply no quick-fix for years of inaction and mismanagement.
Ballooning tariffs have added to miners’ woes, and the Minerals Council has warned that Eskom’s proposed increases for the next three years will shutter all but one gold mine in the country. Security of supply has also been of concern, and for mining firms with exploration or expansion plans, access to Eskom power may just be the hurdle that proves impossible to cross.
Listen to Business Day deputy editor Jana Marais and mining and energies writer Lisa Steyn as they reflect on the highlights of the Indaba.
Therefore rest assured that no serious investment dollars will be heading this way before there isn’t only a plan for Eskom, but significant and definite action. The other certainty is that none of this will happen painlessly. Elsewhere on this page, the National Union of Mineworkers promises to greet any plans of unbundling with “militancy and radicalism”. Few pundits would bet against them.
Another tricky problem is the often acrimonious relationship between companies — and government — on the one side, and mining communities on the other. Mining communities, with the help of nongovernmental organisations (NGOs) and social justice lawyers, are becoming increasingly effective at organising themselves and demanding their slice of the pie.
Xolobeni on the Wild Coast, where the majority of the community has been opposed to mining rights for years, is one high-profile example. How Mantashe, who seems to be pushing for mining in the area, treads those ancestral lands will be carefully watched by stakeholders across the spectrum.
A study released this week by ActionAid found that nearly 80% of residents in mining communities do not feel that they benefit at all from the operations. Even more concerning is that 8% of respondents felt the impact of mining was only negative, bringing sickness, dispossession and damages.
This should be of huge concern to companies, who typically invest significantly in social infrastructure such as schools, clinics, crèches and sports grounds in host communities. As a result, anyone who spends some time in small-town SA would be surprised by the ActionAid findings, as mining towns are generally in a far better state than their counterparts that rely mainly on agriculture and social grants to keep economies going.
The government will simply have to step up and improve service delivery in communities across the country. That burden cannot, and should not, fall on mining companies alone.