Roger Baxter: Bouncing back from 9 wasted years

Roger Baxter, CEO of the Minerals Council of South Africa.
Roger Baxter, CEO of the Minerals Council of South Africa.

A year ago, as we arrived in Cape Town for the 2018 Mining Indaba, there was cautious hope in the business community and elsewhere that South Africa’s political set-up was going to change for the better. This was because Cyril Ramaphosa had been elected ANC president the previous December.

However, it was far from clear at that time that what he has since called the "nine wasted years" were over, given that President Zuma still had almost 18 months of his term to serve. In fact, those years had been worse than merely wasted. Those years had sent our industry into an accelerating downward spiral.

It was still nine days before we were told that President Zuma would be stepping down, ten days before Ramaphosa became President of South Africa, and a full 21 days before Gwede Mantashe would be appointed to replace Mosebenzi Zwane as Minister of Mineral Resources.

Since then, the business and mining environment has changed beyond recognition. Instead of deep pessimism, there is today a knowledge and recognition that government leadership is committed to resolving the country’s myriad socio-economic challenges with integrity. For the mining industry in particular, the minister has adopted a similar approach.

Yet the industry, along with most other South Africans, is painfully conscious of the severity of the damage that was done to the country and its institutions through mismanagement and corruption over those nine years, and how much work needs to be done to repair that damage. And the challenges of unemployment, poverty and inequality remain, with no moves towards a greater consensus on how to address them.

It is in this context that we look at the changes that have taken place in these new circumstances, and think about the way ahead.

The biggest change has been the extent of real engagement there has been between business – and the industry in particular – and government.

There have been a number of useful engagements with the president by business. And in Mantashe, we have a minister always willing to engage and listen, not only over broad policy issues, but also the detail of what different mining sectors need to develop and grow into the future. That does not mean that we agree on everything, but being able to engage is a very important starting point.

The Mining Charter has been a major issue over the past few years. The Minerals Council, and most of the industry, consider most aspects of the charter published in September 2018 to be a framework with which we can live. Naturally there are several aspects in respect of which we would have preferred a different outcome, but also accept that the Minister and his department had many different interests to accommodate.

There is, however, one aspect of the charter about which we have very deep concerns. That is the provision that the charter does not fully recognise the continuing consequences of previous empowerment transactions. This is the case in respect of mining right renewals and transfers of these rights.

Such a requirement would have a severely dampening effect on the attractiveness of mining in the eyes of investors. It is also, in our view, a breach of the declaratory order on the matter issued by the North Gauteng High Court in April. It is something which will still need to be resolved somehow, preferably through further dialogue.

We appreciated the Minister’s decision in August to scrap the Bill amending the MPRDA, which clearly was going to face constitutional challenges.

And, as mentioned, we have appreciated the intensive sectoral engagements that have opened up dialogue. The mining industry stands ready to continue working in partnership with government, and all other stakeholders seeking a growing, responsibly managed industry whose benefits a fairly distributed.

What the industry proposes as the necessary preconditions for achieving this is:

  • Ethical leadership and good governance. The commitment to this is clear;
  • Policy and regulatory certainty and competitiveness. We have made some progress in this respect;
  • Available, efficient, cost competitive and reliable infrastructure. The hard work still lies ahead, with a rehabilitated Eskom as the most critical component;
  • Improving productivity and competitiveness. This requires effective leadership from management, government and organised labour; and
  • Creating a "greenfields exploration boom". The decision to exclude exploration companies from charter adherence is a good contribution to this goal.

The Mining Indaba is a useful forum where these issues should be discussed, bringing, as it does, stakeholders from across the world that would not normally have the opportunity to interact, including producers, investors, governments and many others.

*Roger Baxter in CEO of the Minerals Council South Africa.

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