There is a treasure in my backyard

2013-03-13 08:17

In South Africa, we’ve had, still do, and will continue to have challenges facing our lovely nation – social, political, economical, etc. However, Mother Nature was a bit kinder to us – endowing us with valuable natural resources. The South African economy is what it is today because of this natural endowment.

My main concern, though, is that the majority of South Africans have become ‘passive beneficiaries’ of this national resource, the treasure in our own backyard.

For the majority of South Africans, this natural resource is but good for these few things:  Jobs; Social Development; Affirmative Action, and BEE opportunities. The government also passively looks into Tax from this industry to benefit other passive South Africans – more than 15 million of South Africans (more than 30% of population) are social grants recipients (economically inactive). Those who try to get beyond this ‘passiveness’, tap into BEE & tenderpreneurship – still passive in my view. And this conveniently links up to my previous article – we become ‘beggars’, passive beneficiaries.

We plead with, even demand, foreign investors to come into our shore and be ‘active beneficiaries’ of these resources (e.g. the Chinese). We, and the government, are only happy for them to create job opportunities for us, develop our communities, pay taxes and comply with BEE laws. All boxes ticked, and we’re happy.

Two things are key here: knowledge and capital. Noted, Capital may not be readily available to all South Africans. But education, knowledge – this should be freely available to all South Africans. But key knowledge in the mining industry is still in the hands of but a few – and those are the ones who tap into every opportunity out there - those remain the few active beneficiaries.

What can the government do? Let’s explore two possible avenues which I believe have been under-explored: Sector Education & Industrialisation.

Sector Education

This is where it all starts: Education. Knowledge transfer. Knowledge empowerment. As a nation rich in mineral resources, our education system fails dismally in equipping the youth to tap into these riches and the opportunities that come therewith.

Given how key this is to the SA economy, I believe Mining & Resources should be incorporated into our school curriculum - at the very least as a module within one of the subjects. It doesn’t even have to be an advanced curriculum, just the basics. For example: The majority (if not all) of matriculants, same with most university graduates, cannot tell you what platinum is used for, what chrome is used for, even iron ore, no idea how the diamond market works, etc. And if we don’t know these basics or what challenges are facing the industry, that already limits any possible innovation in the sector, it limits any entrepreneurial flare, instead, it promotes this ‘passive beneficiary mindset’.

On the other hand, the children of mining families, like the Oppenheimers, Motsepes, Kebbles, (Malemas, almost), etc –are likely to have the most exposure to what mining is all about, because they grow up in that environment. By the time they reach maturity age, they know enough and can make informed decisions about whether to pursue this further, come up with innovative ideas, and so on.

But the mineral resources in this country are not the private resources of the Oppenheimers and the Motsepes – it’s a national resource, a national treasure. This information should not be for the privileged few. The most basic details should not have to be acquired at a cost of several thousands of Rands at university as a mere career option.

Take for example a mining town like Rustenburg or Burgersfort. The kids grow up there, attend school and eventually finish matric, even pass with several distinctions. But up to that point, they still don’t know much about the platinum being mined in their backyard. They only know that there are job opportunities there, there mine is carrying out some valuable social development in their communities, and so on.

Then they leave their hometown and go to Jhb, Durban and Cape Town to pursue further education– those interested in a job in mining, will only then start to learn about what is really happening back home in their backyard. After they have acquired this knowledge at a hefty cost, only then do they come back home to the Motsepes: “Hey, now I know what you’re doing here, please give me a job so that I can do it for you”.

But the majority of the community still remain with “Hey, I don’t know what you’re doing here or why you’re doing it –but I need a job: just tell me what to do and I’ll do it”. And for most, that’s enough. For the government, that’s enough too – as long as the mines pay taxes and comply with legislation & licence conditions.

We have poor communities that are sitting on treasures, until the ‘well-informed’ and ‘well-capitalised’ come and tap into that resource – only for those communities to settle for jobs and some social development initiatives.

But it just goes to show how ‘knowledge is power’ – those who have the knowledge, have the power. Let’s have an education system that not only seeks to qualify one to serve, but seeks to inform effectively and instigates economic activity among the people.

Sector Industrialisation

Most often times, I get the feeling the government lacks vision about the natural resources of this country. Or I could be wrong. Maybe the focus has been too much on redressing the ‘past’ that maybe the government has overlooked actually developing a plan of action about the country’s natural resources. Too much focus on BEE, AA, Nationalisation, Super-tax, Jobs, etc.

But I believe the Government needs to go beyond this. One key aspect, is promoting Industrialisation in the sector.

This needs vision. It needs a strategy in place. It needs a plan of action. We have heard talks of government developing legislation to encourage/ promote ‘local beneficiation’ of mining products. That has worked for some minerals and has been tough for some.

Why? Because the responsibility has been mostly pushed to the mining houses. But why should a gold mining company have to bother itself about jewellery manufacturing? Why should a chrome producer bother about ferrochrome processing? Why should a platinum miner bother themselves with manufacturing autocatalysts? Why shift the responsibility so much?

Looking back, the apartheid government was bold and visionary enough to say, “we do not have oil reserves, but with the coal that we have, we are going to start an oil industry” – and Sasol is one of South Africa’s most successful stories. In the 1920’s, the Chamber of Mines was bold and strategic enough to say “we are the biggest producer of gold, let’s build our own gold refinery” and Rand Refinery was born, a gold refinery that ranks among the best in the world.

Those are industrial plans being put into action. Maybe that is the kind of boldness we need in our government. Vision. Leadership. What is the government’s strategy with the rest of the minerals – whilst we still have them?

We need strong, bold & competent leadership in government that will say, for example: “we are the biggest platinum producer in the world, we need an autocatalyst plant in the country. Let’ssource &  develop the necessary skills. Let’s secure platinum supply for the plant. Let’s secure off-take for the finished product. Let’s put the plan into action.”

Right now, the government has found it prudent to consider investing over R80bn in a new oil refinery – I won’t dwell on the merits or demerits of this move. But, if government can commit to such a big investment, despite voices advising otherwise, can’t they do the same with regard to the natural resources we actually do have?  How about a local plant that will manufacture some of the mining equipment currently being imported? How about setting up a state owned beneficiation plant for some of our resources? It can always be privatised later if need be. Granted, corruption and incompetency won’t prevail of course.

Mining activity is springing up all over the rest of the African continent - given how long we have been in the game, South Africa should have been well-placed to supply the necessary mining equipment, mining expertise, to carry out beneficiation for these countries, and more. But no, we don’t have much to offer in that regard. We’re just enjoying the jobs and taxes, while waiting for our resources to be depleted.

Maybe I’m asking for too much of our government. So far, it seems a struggle to even set-up a state-owned mining company.

Let me concede though, the government has come up with the bold and detailed 'Industrial Policy Action Plan' (IPAP #2). IPAP2 does identify beneficiation in the mining sector as one of the sectors being targeted for industrialisation. However, IPAP has been around for well over 5 years now. I am yet to see a concrete action plan being put into execution in this regard. Or are we waiting for a foreign investor to come forward? Hail the Chinese!

*******

These are our natural resources. Our national treasure. I don’t think we have embraced & fully explored this as much as we might have.

"There is a treasure in our backyard". In a few decades, we will find ourselves saying, “There was a treasure in our backyard”. If we don’t fully explore the opportunities now, by then, we won’t have much to show for it except high rates of unemployment, dwindling infrastructure and a crumbling economy.

While we, as the people, cannot and shouldn't always wait on government to do this and that - some initiatives should be undertaken by government as a matter of economic policy and leadership.

Education >>>> Integrity >>>> Vision >>>> Boldness >>> Action.

Dear government.

*******

Xolani Khumalo. You can follow me on twitter @xolanik

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