South African mining needs new clustering model – Ramphele

6th February 2013

By: Martin Creamer

Creamer Media Editor


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CAPE TOWN ( – The South African mining industry needed a fresh, new model that simultaneously boosted agriculture and industry and put an end to the currency-strengthening Dutch Disease that inhibited exports and stunted growth, Gold Fields chairperson Dr Mamphela Ramphele said on Wednesday.

Ramphele told the Investing in African Mining Indaba that the only way to respond to the current problems in mining was to change mining’s core business of extraction to one of clustering of mining with agriculture and manufacture, using all the available resources, from land to energy and tailings dams.

She said that the mining industry needed to be both a catalyst and an engine of growth in a brand new way that required buy-in from government, business and labour.

Workers needed to take a longer-term view beyond wage increases and unions needed to be at the forefront of promoting innovation and productivity.

The use of technology required openness and defending existing jobs might, therefore, be to the detriment of workers.

The imperative of creating new types of jobs had to be at the forefront.

“We cannot solve today’s problems by using the same mining model. We should start the difficult conversations for mining’s restructuring as a matter of urgency,” Ramphele said.

Countries like South Africa, with rich mineral reserves, were particularly affected in the globalised world as a result of their local currencies strengthening against the dollar, which led to deindustrialisation and dwindling agricultural activity.

“We will have to accept that the traditional way of mining in South Africa with reliance on plentiful labour is over. We better get used to it,” she added.

The shrinking economic cake, along with the rising tide of expectation on what freedom would deliver, had raised the risk profile of South Africa, where there were “still many time bombs waiting to go off”.

A positive response strategy was to cluster agricultural and manufacturing businesses around mines that would create an economy after the mining operations had exhausted their resources.

The approach of simply making a profit from mining was counter to the twenty-first-century reality of the interconnected nature of society fuelled by rapid technological advances.

Mining needed to set up a new sustainable foundation for itself as a matter of urgency so that any mine built in  the twenty-first century benefited everyone.

All legacy issues needed to be dealt with and the model of sustainable mining needed to be implemented.

These difficult conversations needed to be held in an atmosphere of candour and the pursuit of common good.

The risk of inflating government's role should be minimised and the private sector needed to sustain the industry in these challenging times.

“Silence in the face of abuse of power in the case of governments tends to come back to haunt us,” Ramphele told the conference.

The extractive mining industry models were being challenged on many fronts and the idea of economic elites being the main beneficiaries was morally wrong and bound to lead to civil conflict, which was bad for business.

Mining had more often than not relied on monopolistic business models that limited new ideas.

Greater transparency was being demanded and labour benefit-sharing arrangements were essential going forward.

Avoiding the proverbial resource curse, with the elite being the beneficiaries of nontransparent mine licensing arrangements, was paramount.

The experience of black-economic empowerment had demonstrated how the extractive system had seduced the new black elite to become part of a closed system.

“If we could go back, I would make employees the largest beneficiaries,” she said.

South Africa was finding itself in a very difficult position that had all the symptoms of the Dutch Disease, which pushed up the rand and made South Africa increasingly uncompetitive.

Reform had to begin with difficult conversations to create an environment that would enable investors to commit for the long term.

Government needed to create incentives and mining houses needed to address legacies like disease and acid mine drainage.

There was an urgent need to realign the time horizon of high returns with the unavoidable longer-term horizons of capital-intensive industries.

Education and wellness should be the new pursuits.

Unions had dropped the ball in fighting for good family life and housing, with union leaders perceived to have become part of an elite.

The labour-intensive side of South African mining has deterred investment and the longer it kept going, the longer investors would stay away.

The future demanded a fundamental mining-model change towards a clustering of economic activities, generating multiple benefits for companies and the government and converting costs into revenue.

“Almost every challenge can be turned into an opportunity for change. The hardships can be turned into learning opportunities,” she told the conference.



Edited by Creamer Media Reporter


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