History repeating itself as SA’s mining sector finds itself in turmoil

22nd January 2016 By: Jade Davenport - Creamer Media Correspondent

One fundamental truth about the march of human progression is that, as much as things may change, they stay the same. Put another way, history has a habit of repeating itself, although not always in the most obvious of manners.

Take, for instance, the turmoil in which the South African mining industry is floundering. The industry is currently beset by a myriad of challenges ranging from falling commodity prices to ever-increasing operating costs, labour-management disputes and waning investor confidence. While these challenges may be par for the course in most mining jurisdictions, the industry globally being subject to the roller-coaster ride that is commodity cycles, the most significant aspect damaging the industry, and one that is applicable only to the South African context, is regulatory uncertainty.

Such uncertainty is being fuelled by the fact that there has been no effective legislation regulating the industry since December 2012, following the introduction of a Bill, which is still pending, to amend the Mineral and Petroleum Resources Development Act (MPRDA). Similarly, the Mining Charter is currently being challenged by both a High Court application and a declaratory order.

Added to this is the troubling reality that there is a distinct lack of stability and experience concerning the political leadership of the industry. During the last four months of 2015, Ngoako Ramathlodi was replaced as Mineral Resources Minister with little-known African National Congress MP Mosebenzi Zwane, while Thibedi Ramontja resigned as director-general for “personal reasons”.

Given the crisis-like situation the industry finds itself in currently, it would be quite natural to hark back to a more golden age when mining was the bastion of the South African economy and lament what can only be described as a drastic fall from power over the last few decades. While such discontent may be justified, given the combination of challenges, it must be firmly noted that our mining industry has never been quite satisfied with its status quo and has often been rather vociferous in stating its dissatisfaction with whatever challenging predicament in which it might have found itself.

This phenomenon is clearly illustrated by reading through the editorial opinions of the many mining magazines that have been published over the last 120 years. A case in point would be the editorial opinion titled ‘Paying the Piper’, which appeared in the April 8, 1944, edition of The South African Mining and Engineering Journal. That column has such resonance with today’s situation – despite having been written more than 70 years ago – that one could be mistaken for believing it was written in the last few months. In fact, the resonance is so startling that I have taken the liberty of repeating excerpts of the editorial to illustrate how, despite how much the South African mining industry may have progressed over the decades, the themes of discontent are still very much the same.

“It appears to many that the policy of the country, as it affects the mining industry and, in the end, the Union’s economic standing, may be headed in a dangerous direction. If disaster is to be avoided, it is necessary for the Cabinet to have the advice of men of imagination and practical experience, and for the country to be made fully aware of what the industry means to every citizen . . . It would ill befit this journal to suggest that delays in taking decisions on matters of such importance as this, and the failure to enunciate a definite policy for the mining industry, is intentional, since, at bottom, there appears to be agreement on the point that the life of the industry must be prolonged. There are grounds for believing, however, that the vision of some Cabinet Ministers is somewhat dimmed, and they are unable to appreciate fully the peculiar difficulties implied by large-scale mining operations. “The sooner this state of affairs is rectified, the better it will be for the country as a whole.”

The journal went on to suggest that, at the heart of the problem over mineral policy, was the fact that government lacked mining men of experience and knowledge who could elucidate the specific challenges that confronted the industry.

“It is obvious that the mining industry, in spite of its growth and increasing economic importance, has allowed itself to drift into political backwaters. “The days are gone when there were half a dozen men in the House who could, and did, present the case for the mining industry with eloquence and authority. “There is little wonder, then, that today men and women on the Rand, and indeed in many parts of the country, are beginning to comment on the attitude of the leaders of the industry towards the politics of the country . . . The fact remains that, good as government’s intentions may be, the industry is represented neither in the House nor in the Cabinet by anyone fully aware of the complex problems being faced from day to day, let alone the even greater problems arising from its long-term policy. With the withdrawal of Sir Robert Kotze and Sir Ernest Oppenheimer from active politics, there is no member left with the intimate knowledge of the problems of the gold mines necessary to present the industry’s case. Nor can we recall a Minister of Mines who had this knowledge.”

The journal concluded that the future was fraught with uncertainty and yet the mining industry would still be called on to do much in the interests of South Africa. “Leaders of the industry must shoulder responsibility because of their unwillingness to play a part in the affairs of State . . . There is place for the trained and receptive mind in the House and in the Cabinet. “Among the higher mining executives are those whose personality and acknowledged ability would be a distinct asset to government. The time has arrived, we feel, when they should consider seriously whether their services cannot be made more readily available to the country.”