BUSINESSLIVE / 28 JANUARY 2019 - 19:18 / JONATHAN VEERAN, MANUS BOOYSEN AND RITA SPALDING
This is a good opportunity for the minister to present a realistic picture of the struggling industry — and to show what action he’s prepared to take to fix it
Every February delegates to the Mining Indaba in Cape Town pack the auditorium on the first day to hear SA’s mineral resources minister deliver the keynote speech. This year they will be hoping for indications of decisive policy action to arrest the long-term decline in SA’s mining sector, specifically corruption, policy uncertainty and inefficiency.
Gwede Mantashe. Picture: SOWETAN
Although mining still contributes 8% of SA’s gross domestic product, the sector has declined dramatically since 1980, when it accounted for almost half of global mining by value. In the 2017 Fraser Institute report, SA’s investment attractiveness for mining companies was ranked 48th out of 91 countries.
SA has unacceptable levels of unemployment and poverty. Illegal mining is a symptom of this poverty. The only way to fix these problems is through economic growth, in which mining investment and growth play key roles.
Mineral resources minister Gwede Mantashe has taken some positive steps since his appointment a year ago, such as scrapping the Mineral and Petroleum Resources Development Act (MPRDA) Amendment Bill and improving on his predecessor’s mining charter. He has shown strong leadership.
We believe this year’s indaba presents a good opportunity for the minister to take a step back and consider where the industry is — and present a realistic picture. The minister ought to create a climate conducive to investment and growth, and then
He cannot ignore the perception that SA is corrupt. He should acknowledge the mistakes that were made, for example with Eskom and Optimum Coal, and say what is being done to address those issues. He has already taken steps by temporarily closing the department of mineral resources’ (DMR’s) regional offices in Mpumalanga and Limpopo for investigation. He could reinforce that by making the point that the public service is there to serve the people, not itself. The industry would like to hear an update on what actions have followed the suspension of those two regional offices, and whether there will be prosecutions.
The department needs to provide a facility for whistleblowers. At present mining companies are reluctant to expose corruption or take unfair administrative actions to court as court applications cost time and money and often result in departmental officials retaliating with a lack of co-operation.
Mantashe also needs to address what the country’s minerals policy will be for the next three to five years and how it will improve the lives of mining communities, the fiscus and assist in the re-industrialisation of SA. Although SA does not have significant quantities of the energy minerals the world needs, the minister has to show how the country is encouraging exploration by eliminating the empowerment requirements for exploration companies. He could also offer other incentives for exploration.
The minister could address the DMR’s unclear policies, which have two consequences: legal advisers like Webber Wentzel cannot give clear advice to clients because there is too much uncertainty on implementation; and government administrators have too much room to make incorrect decisions.
That means decisions are taken to court, which takes years, and investors lose interest.
The minister could acknowledge that SA’s neighbours, such as Botswana, Namibia and Zambia, are becoming more formidable competitors for mining investment as they review their own mining policies. Namibia, for example, has abandoned its 25% BEE requirements for investors.
The department does not have the capacity to administer the mining law effectively and efficiently. There are extended delays in the granting of prospecting and mining rights and section 11 consents. Statutory powers under sections 54, 47 and 93 are exercised indiscriminately.
The minister needs to acknowledge the capacity constraints in his department and assure investors he will appoint the right people, train them and ensure they administer mining law properly. He needs to emphasise, and inculcate, a culture of honesty, transparency and helpfulness in the DMR.
He should also explain how he is addressing the acute lack of resources within the department. The industry would welcome fixed timelines for the grant of applications (new rights, renewals and section 11) and reassurance that these timelines will be strictly adhered to.
• Veeran, Booysen and Spalding are partners in the mining sector at Webber Wentzel.
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER