An unnurtured South African mining industry will disappear, Sibanye-Stillwater CEO Neal Froneman warned last week when he slated the regulator for allowing illegal mining activity to spiral out of control and for causing equity risk and the cost of capital to rise, placing mining companies at a huge competitive disadvantage.

The rebranded Sibanye-Stillwater recorded a net loss of $363.8-million in the six months to June 30, causing it to step back from the declaration of dividends against a background of being a substantial dividend payer since its inception four years ago.

“Unless we nurture the South African mining industry, it will disappear,” Froneman warned at a function preceding the company’s presentation of results, which saw group operating profit of R3.2-billion impacted on by lower gold production for the period.

Following its unbundling from Gold Fields, the then Sibanye Gold listed on the JSE in February 2013 with a share price of just over R13 a share and a market capitalisation of close to R10-billion, JSE CEO Nicky Newton-King said at the function marking the company’s new Sibanye-Stillwater branding.

Today the share price is just under R21 a share and the market capitalisation R46.5-billion.

At the rebranding, Froneman made the point that a single mining industry stakeholder could not be expected to carry the full weight of the industry. “We’re only one of the stakeholders. A number of stakeholders are completely selfish. They further their own interests.

“I hope that, looking forward, the selfishness will change. We, as a company, will certainly play our role in trying to improve the current situation in the mining sector in South Africa,” he said.

The rebranding follows the acquisition by Sibanye of Stillwater Mining Company of the US, a high-grade, low-cost producer of platinum-group metals and the world’s only primary producer of palladium.

Questioned by Mining Weekly, Froneman said world-class policies and standards were applied at Stillwater, “a pristine part of the world”, yet a place where mining flourishes commercially and environmentally, with communities also important stakeholders.

Stillwater, he said, was also providing the company with a base from which to grow further in the North American region.

At the other extreme was the regulatory framework in South Africa, which the mining industry as a whole was not prepared to accept, owing to the proposed regulations being contrary to the long-term interests of the people of South Africa.

“We know our rights, we do have a good Constitution, we’ve got a good legal system and, as you would have noticed, the Chamber of Mines has been very successful in opposing some of these nonsensical suggestions.

“We will, of course, do our own thing if necessary, but, for now, we’re right behind the chamber,” he commented to MiningWeekly.

As a result of the lack of support, equity risk for mining companies has risen, as has the cost of capital, which puts us at a huge disadvantage from a competitiveness point of view.

Froneman expressed the hope that all stakeholders would come together and resolve matters in view of the important part that mining plays in uplifting communities, employees, the environment and shareholders.

In response to a question from Standard Bank mining analyst Adrian Hammond, he decried the limited way in which the regulator had engaged with the Chamber of Mines on Mining Charter III and condemned this as being “clearly unacceptable”.

He described the proposals of the revised charter as being “ludicrous, unacceptable and unconstitutional and, quite honestly, we won’t accept them”.

Owing to the regulator playing its cards “in exactly the wrong way” after the chamber held back on its declaratory order, the industry has ended up with legal leverage.

And it is real leverage, and those court cases will proceed,” Froneman said, adding that the chamber had been very successful in obtaining a court interdict and staving off the attempted imposition of a moratorium on the transfer of mining licences.

“It’s not a sustainable environment to carry on like that, but, at this point, it is the only language that is understood by our regulator,” he told investors, analysts and journalists at the company’s presentation of half-year results.