Zwane's mining moves resulted in decline and disillusionment - analyst

Minister of Mineral Resources Mosebenzi Zwane at the 2018 African Mining Indaba. (Photo: Rodger Bosch, AFP)
Minister of Mineral Resources Mosebenzi Zwane at the 2018 African Mining Indaba. (Photo: Rodger Bosch, AFP)

IT IS tempting to simply ignore Mining Minister Mosebenzi Zwane’s lame duck speech to the African Mining Indaba in Cape Town last week. Surely no individual has done more to undermine the security of mining investment and nothing he can say now can undo the serial missteps that have constituted his tenure.

Zwane has of late been sitting in the exit lounge waiting only for his old boss, Jacob Zuma, to leave office and for the new broom promised by Cyril Ramaphosa to sweep clean. But Zwane did reiterate some of the old shibboleths held in ANC policy circles about the sector and it is worthwhile responding to these, as they may be more enduring than his lamentable tenure.

First, there is a dangerous lack of focus. The minister’s primary response should be on creating an enabling environment for mining investment. But he has made such a mess of this basic task that he is simply left with nothing substantial to say about it. 

It is significant that the only time he used the term "enabling environment" in his speech was in reference to minerals-linked manufacturing beneficiation, which is, of course, the responsibility not of his department but Rob Davies’ Department of Trade and Industry.

Then there is the sheer range of matters mentioned in his short speech including global markets, safety, junior miners, hydrogen power fuel cells, De Beers’ safety record, geological mapping and as a fitting climax to the entire meaningless amalgamation, the discovery of clean drinking ground water in Beaufort West. 

Well done on the last by the way. But that does not change the fact that this was not a speech with any focus whatsoever.

Second, the minister’s boasts about improved production in the second and third quarters of 2017 - 8.2% and 6.6% respectively - are meaningless. 

These are upward blips only because 2016 had been such a bad year. Last year's 4% expansion followed 2016’s 4% contraction; it means that at the end of 2017, mining production was at almost exactly the same level it had been at at the beginning of 2016.

Employment claims disingenuous

The same point applies to the minister’s claims about employment in the industry. His statement that "while the industry did not breach the half million mark in employment", it has grown, is simply disingenuous given the long-term job shedding trend in mining. 

The sector has lost 70 000 jobs since 2012, about 15% of its workforce.

Third, the minister sneered at what he calls "balance sheet conservatism", the factor he seems to think is responsible for the negative level of capital investment in the sector. It is, of course, entirely true that the mining majors were forced into a defensive posture by a sharp downturn in global resources prices after 2014. 

But that is only part of the picture. In South Africa, the investment strike was driven by a fundamental lack of faith in the regulatory system, centring on the minister and his department.

In fact, the minister can’t even get his basic time line right. Zwane claims that "balance sheet conservatism" was the reason investment dried up in 2011. But the plunge in mineral prices happened in 2014. The point at which the domestic enabling environment went haywire with massive labour unrest and the Marikana massacre, was in 2011.

Zwane’s congratulations to "those who had the foresight and fortitude to continue exploration and development programmes" is even more bizarre. He is implying that mining companies did not invest in South Africa in recent times because they simply couldn’t see an opportunity in front of them. 

Actually mining companies saw massive threats, especially in the regulatory framework and the way it was and still is administered. Those threats were epitomised by the person of Mosebenzi Zwane. Just ask Glencore, who lost the Optimum Coal Mine thanks to his intervention.

The job of mining minister in South Africa is a delicate one. The issues of empowerment, safety and beneficiation are important but they have to be fitted into a hierarchy of issues in which the base is security of investment. 

Get that right and all the good things that mining can deliver are possible. Get it wrong, as Zwane did, and the result is decline and disillusionment. Let’s hope his successor has a better grasp of the fundamentals of the job requirements. 

  • David Christianson is a policy fellow at the South African Institute of Race Relations, a liberal think tank that promotes economic and political freedom. Views expressed are his own.
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