What about all the plans?

The ANC's head of economic policy, Enoch Godongwana. (Photo: Thapelo Maphakela)
The ANC's head of economic policy, Enoch Godongwana. (Photo: Thapelo Maphakela)

The ANC's half-hearted policies fail to make an impact.

The ruling ANC has an illustrious career in producing policy proposals that never see the light of day. Occasionally, some proposals are implemented half-heartedly, resulting in no meaningful impact achieved by them.

I was reminded of the ANC’s lacklustre track record in implementing its policies when the political party released a 51-page policy document on 10 July, which spelled out proposals aimed at kickstarting the Covid-19-battered South African economy.

Interestingly, the document has a page dedicated to proposed measures that could be undertaken to boost production and investment in the ailing mining sector.

However, the page does not mention anything about the African Exploration Mining and Finance Corporation (AEMFC), the state- owned mining company established in 2011 with the intention to develop strategic minerals with private investors in order to supply them as feedstock to local manufacturers at competitive or discounted prices.

This intervention was necessary to drive the beneficiation of SA’s raw materials to help the country make headway in industrial export markets.

In February 2012, the ANC released a research report that recommended that the state-owned mining company (SMC) be used as a main vehicle for increasing government participation

in mining, whereby the SMC would hold exploration rights to minerals by having a first- sight of all new state-financed geo-data.

The report was compiled by a group of researchers who studied 12 countries withSMCs, where it was found that some of these countries were moving towards privatising or corporatising their SMCs. These countries provided the lens from which to investigate models of state participation in mining, including nationalisation, which was a hot topic at the time due to left-wing politician Julius Malema clamouring for the seizure of mines without state compensation.

One of the key recommendations of the 2012 report involved the placement of AEMFC under the Industrial Development Corporation (IDC) until legislation was developed to make it standalone.

The researchers felt that the IDC was best-positioned to nurture the company, owing to its vast experience in investing in new mining projects and nurturing them into giants. At the time when the recommendation was made, the IDC held stakes in coal miner Sasol Mining, iron ore producer ArcelorMittal SA, ferrochrome producers Hernic and Merafe, platinum miners Impala and Wesizwe, and aluminium maker Hillside Aluminium.

Although the research paper never spelled out what the strategic minerals are, experts have always considered them to be coal (used for power generation), iron ore (for steel production), and platinum (for use in manufacturing of jewellery, electronics, and automobiles).

While the SMC was introduced in the form of AEMFC, its implementation has been half-hearted, with many of the recommendations in the ANC’s research paper having never been pursued.

For example, AEMFC was never moved to the IDC where it could have been pushed to greater heights. Instead it was made a subsidiary of the Central Energy Fund, a parastatal reporting to the department of mineral being achieved by them. resources (DMR), where under the then political leadership of minister Mosebenzi Zwane the department allegedly focused on helping the politically-connected Gupta family to buy a coal mine supplying Eskom.

It appears that since its inception, the AEMFC was neglected and as a result degenerated into a laggard, only managing to invest in three operations supplying coal to Eskom.

While Zwane allegedly assisted the Gupta-owned Tegeta to acquire the Optimum Coal Mine from Glencore in 2015, the AEMFC was placed under the leadership of Sizwe Madondo. In March this year, City Press reported that Madondo was dismissed by AEMFC after he was found guilty of dishonesty, nepotism, and failing to act in the interests of the company following a disciplinary hearing.

He has been banned from occupying any senior positions at state- owned enterprises after he participated in an attempt to buy Optimum Mine for R1bn, which was liquidated after the Guptas moved to Dubai following allegations of the family’s involvement in state capture and grand-scale corruption, facilitated by former president Jacob Zuma. The AEMFC has been stagnant. In 2016, its three operations, Vlakfontein, Klippoortjie, andT Project employed a total of 320 people. The workforce dropped to 285 in 2019. In 2016, the company generated a profit of R82.4m from a revenue of R376m. In 2019, a profit of R106m was achieved from revenue of R634.9m.

In the policy document the ANC released in July this year, the party is decrying the lack of mining investment and a decline in exploration activity, especially early-stage exploration. But it created the AEMFC to take a lead in facilitating investment alongside private investors. The company does not feature anywhere in the document. Instead, the party is proposing the review of tax policies and fiscal instruments to make the SA mining industry attractive to investors.

The party is also talking about the need to increase mining income to the sovereign wealth fund. Output in the sector is expected to decline by between 20% and 30% this year and 30 000 jobs are at risk of being lost.

On the same day that the ANC released its 51-page document, business lobby group Business for South Africa (B4SA) released its own 111-page document, in which it argued that the decline in mining could be arrested if the government addressed bottlenecks in rail and ports infrastructure. B4SA said if SA’s mining laws were simplified and ailing Eskom fixed, the industry could create 70 000 jobs by 2024, contribute R30bn to GDP and R10bn to tax revenues annually.

The AEMFC must be positioned to participate in this growth envisioned by B4SA.

Andile Ntingi is the chief executive and co-founder of GetBiz, an e-procurement and tender notification service.

Read more
This article originally appeared in the 13 August edition of finweek. To read the full story, you can buy and download the magazine here.

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