Clear vision needed for troubled South African mining industry – Sipho Nkosi

28th August 2013 By: Martin Creamer - Creamer Media Editor

JOHANNESBURG ( – The troubled South African mining industry needed a clear vision that was resistant to continual change, Exxaro Resources CEO Sipho Nkosi said on Wednesday.

The head of the majority-black-owned JSE-listed company also questioned the sustainability of the mandatory 26% black-economic-empowerment (BEE) ownership requirement by 2014, in view of the unravelling of many ownership transactions on funding snags.

He told the Mining Lekgotla audience that South Africans needed to decide once and for all on what they wanted from their mining industry and then to adhere to that decision.

“We cannot continue to chop and change,” Nkosi said, as recorded in the attached Mining Weekly Online video, which makes compelling viewing.

South Africa needed to get the fundamentals right, like education, if it wanted to be compeititve in global mining.

He said that transactions worth more than R300-million had been done in the BEE ownership space to date.

All the major BEE deals had been done, which placed a question mark over the relevance of the 26% BEE ownership requirement beyond the 2014 deadline.

Onerous funding issues had resulted in the ownership percentages of many BEE entities falling well below the 26% benchmark.

“A lot of deals were done. A lot of companies were involved, but funding of those deals has always been a problem,” Nkosi said.

Although major mining companies had been willing to part with 26%, lack of funding had left many BEE entities with holdings as low as 3%.

Deputy Mineral Resources Minister Godfrey Oliphant said on May 1 next year, it would be ten years since the legislative framework had been put in place for South African mining.

“We can’t continue the blame game. We must take collective blame and start to move forward,” the Deputy Minister said.

He emphasised the need for the country to add value to its commodities locally but said that would not inhibit exports, for which the government was providing enabling infrastructure.

South African leadership needed to rise to the sophistication of today’s mining-industry challenges.

On the issue of transformation, there were companies that had done exceedingly well and those that had not done well would be asked to comply with the law and the social requirements of their mining licences.

He drew attention to living and working conditions of mineworkers, which was followed by Black Business Council secretary general and Zungu Investment Company chairperson Sandile Zungu singling out mining’s migrant labour system as apartheid’s worst legacy, because of the manner in which it had broken up African family life.

Zungu also criticised the government and local authorities for failing to spend its budgets while rural communities, often in mining areas, became disconnected through lack of useable roads and other infrastructure.

He criticised corruption in the construction industry, which he condemned as endless.

He urged mining companies to join the fight for the reform of municipalities, particularly those in the troubled platinum belt.

“The future of our country is in our hands as mining social partners,” Zungu added.

Speakers at a panel dealing with transformation and growth lamented that throughout the industry's history change had been disaster-driven.

The industry was urged to be proactive and to cease its history of only setting out to improve once disaster struck.

Mining was also urged to adopt a mindset of being willing to “refurbish” its workforce rather than going along with the traditional “disposal” of workers.

This lack of willingness to train mineworkers would be turned around when the new Skills Development Act came into force, speakers warned.

The level of wages paid to mineworkers needed to be commensurate with the risk required when working in high-risk underground mines.