The Mining Indaba that took place in Cape Town this week wrapped up on Thursday (May 12), and despite the vastness of potential in this sector for South Africa, one can say that this has not been the country’s ‘finest hour’.
The policy uncertainty and other challenges that continue to plague South Africa’s mining industry are unlikely to have been solved by the time of the next Mining Indaba in February 2023, simply because there isn’t enough commitment and determined leadership to resolve them.
The current framework of mining governance needs to be refocused towards the convergence of sound adaptive policies that intersect the social and economic reality of the country, and geared toward the wellbeing of the industry.
When we talk about a business and investment-friendly environment, we ask ‘Are the harmonisation policies and convergence of rules aligned with the investment interest of mining?’.
The critical thing for the industry and the government is to consider business and regulation as two sides of the same coin.
On the one side, the government is desperate to keep and attract new mining projects to South Africa, especially after falling down the investment attractiveness index despite the industry’s proven ability to drive economic recovery. In 2021, mining achieved more than R1 trillion in minerals production, further strengthening the significance of mining to the economy.
Without mining, South Africa’s recovery would be at a standstill, considering its subpar economic performance and its inability to withstand the impact of adverse external shocks.
The overly narrow goals such as empowerment and ownership requirements have deterred many companies and potential investors from expanding or looking for new projects in South Africa.
They might not have mentioned it in their addresses, but President Cyril Ramaphosa and Mineral Resources and Energy Minister Gwede Mantashe are both desperate to bring forth some policy certainty and finalise the highly contested regulatory environment.
In the current setup, the policymakers have tended to focus on narrow issues such as redress and, in a way, are incapable of balancing the country’s mining governance.
The premise shared by many in the industry is that, unlike Botswana or Zambia, South Africa continues to adopt an overly narrow focus on restrictions and political declarations that overlook the link between regulation and trade.
Opportunity is knocking
It is crucial for policy to respond when events unfold quickly. The sanctions on Russia following its invasion of Ukraine provide a helpful example. Suddenly, a boom of mining opportunity emerges, stimulating the scramble for platinum group metals (PGMs), especially the demand for palladium.
Despite its unattractiveness (investment-wise), South Africa is now the place to turn to for other resources.
Yet what do these potential clients and investors find?
- A regulatory environment that deters them and turns them to neighbouring countries instead;
- An electricity supply crisis that has made power outages and load shedding the norm; and
- A licensing and prospecting rights nightmare.
Regrettably, what is an opportunity for growth and possibly new mining projects and expansion as an outcome of this unintended boom is likely to be missed.
We should not be afraid to remind our leaders in government that reforms and policies in mining, even as a way of redress, have to be guided by the complete vision of where South Africa should be heading.
Government must demonstrate a high degree of policy harmonisation and internal cohesion if it is to achieve that most crucial of objectives: the high, sustainable and well-balanced economic and social wellbeing of its people.
A narrow focus on the industry’s shortcomings and a bias toward using it to highlight and address colonial legacies, and advance empowerment and transformation (essential issues they are), cannot remove the failures or complicities of political elites in failing to achieve economic dynamism and social inclusiveness.
On the other side of the coin is the private sector.
Businesses, as social partners, must recognise that their role extends further than investment.
Beyond economic indicators such as how much is paid in tax and royalties, and how many jobs are created, it is vital that they see that it is by working with government that the long-standing structural problems can be better solved.
Leaders in the industry need to think about mining beyond the narrow profit-making interest. If there is one key lesson from the Covid-19 pandemic, it is that the idea of business as usual is dead.
We are now in the ‘rethinking of prosperity’ phase, where business success converges with societal and environmental wellbeing.
In short, regulation reforms cannot be implemented in a top-down manner. This has not worked in mining since the first iteration of the Mining Charter, and the charter remains contested in the courts.
Reform takes time. However, necessary changes can be achieved together.
Partners and actors (business, labour, communities, youth organisations) play an essential role in transitions, especially when moving from a ‘narrow focus’ economy to one of interlinked issues.
Instead of trade-offs, synergies between the industry’s goals, policy instruments, regulation and solving social hardship must be at the heart of a shared vision that reinvigorates both investments in mining and South African citizens.