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Lessons for SA from Brazil

Anglo American is Brazil’s largest mining investor, which tells us something about ourselves.

When it comes to attracting investment, SA could learn a thing or two from Brazil. The fact that Anglo American is Brazil’s largest mining investor should tell us something about ourselves.

Anglo is betting big time on Brazil, with a US$10 billion investment in the Minas-Rio iron ore project expected to reach production capacity of 26.5 million tons of iron ore concentrate a year, and the exploration and development of the massive Alta Floresta copper deposit in northern Brazil, covering some two million hectares. Anglo’s discovery has attracted other companies to the area, with mineral claims now expanded to 3.5 million hectares, explained Carlos Vilhena of law firm Pinheiro Neto Advogados at a recent presentation on mining in SA and Brazil.

Brazil recently created a mining agency headed by five independent professionals to fast-track the awarding of mining licences. Agency staff, who are mandated for five years and may not be sacked, will take over many of the functions formerly carried out by the Brazilian mining ministry. This is the same kind of fast-tracking agency that has attracted investment into other sectors, such as aviation and telecoms.

Approvals ‘within weeks’

Soon, mining companies will be able to apply online for exploration licences and get approvals “within weeks”, according to Vilhena. In contrast, exploration in SA has been dying a slow death at the hands of an insouciant department of mineral resources, though new mines minister Gwede Mantashe has promised to change this with a R20 billion investment in geo-mapping to assist explorers. SA’s share of global exploration has dwindled to 1%, despite the country accounting for 94% of the world’s known platinum reserve, three-quarters of its chrome and nearly 20% of global vanadium.

Brazilian president-elect Jair Bolsonaro, known for his colourful language and disdain for criminals, plans to leave key finance and economic posts in the hands of market liberals. Like US President Donald Trump, he wants his legacy to be economic prosperity and massive job creation.

“This is the first time in a generation that Brazil has not had a socialist leaning government,” says Victor Salinas, a Brazilian business consultant. “It shows how fed up people are with the government.”

Brazil seems to have been through many of the brutal lessons SA is currently experiencing in attracting foreign investment and decided to get the government the hell out of the way. It’s applying the same fast-track methodology to infrastructure investment through its Investment Partnerships Programme (IPP), which has so far pre-approved 191 projects worth $62 billion.

In SA, major infrastructure projects are for the most part originated by state-owned companies such as Eskom, Transnet or government departments. In Brazil, the IPP allows private companies to motivate projects and has introduced new rules and tax benefits to encourage investment. Key areas for infrastructure investment have been identified, and public and private financiers are encouraged to get involved.

A case in point is the expansion of the Carajás Railway involving the construction of 570km of rail to link Serra Sul, the largest iron ore mine in the world, to the coast. Unlocking the huge wealth of Serra Sul would not be possible without the rail ink. This type of infrastructure project is seen as an enabler of economic growth and Brazil is pouring massive resources into rebooting its economy through projects of this nature. Similarly, SA will need the cooperation of other state-owned companies such as Transnet and Eskom to unlock mineral wealth. The 861km Sishen-Saldanha railway line was built in 1976 to provide port access for iron ore in the Northern Cape. More projects of this nature will be required to unlock SA’s mineral wealth, along with a long-term solution to Eskom’s faltering power supply which has been a key bottleneck frightening new mining investment away.

Resounding success

Brazil may not be the perfect model to emulate given its sluggish economic growth and the bloated welfare state, but in some respects, it is leagues ahead of SA, particularly when it comes to attracting investment. The creation of the IPP is proving a resounding success.

“Infrastructure projects are presented at the IPP secretariat and then prioritised and fast-tracked,” explained Adriano Trindade, also from law firm Pinheiro Neto Advogados. “Some projects are originated by the private sector and then adopted by the government. The priority sectors are energy, rail, ports, and transport.”

Brazilian mining investment is expected to hit $19.5 billion this year, up from $18 billion in 2017. Total capex among the major SA mining groups in 2017 was $3.4 billion (R48 billion), a figure that has been on the decline for several years. Peter Leon, partner at Herbert Smith Freehills, explained that SA’s regulatory uncertainty under former mines minister Mosebenzi Zwane had suffocated investment. The sector now appears to be turning the corner after the appointment of Mantashe to the ministerial post and the finalisation of a mining charter more agreeable to investors. Still, it takes months or even years for a mining licence to be issued by the department of mineral resources (DMR), something Mantashe plans to rectify.

Double the trouble

Environmental approvals are another hurdle in mining projects, with several recent court cases going against the DMR. “Environmental controls should have remained with the department of environmental affairs (DEA), but you have two government departments involved in the process, and this adds delays,” says Leon. “The DMR does not have the competence to deal with environmental issues, so these issues should rest with the DEA.”

SA employs roughly 464 000 people in mining, against Brazil’s 180 000. Mineral sales in SA totalled $20.5 billion (R301 billion) against Brazil’s $32 billion (R448 billion). Coal accounts for some 40% of SA’s mineral sales, platinum group metals 31% and gold 23%. Iron ore accounts for two-thirds of Brazil’s exports.

“With deep capital markets, sophisticated financial systems, as well as world-class engineering schools and firms, South Africa still has the necessary attributes to reclaim its place as the continent’s leading mining destination,” says Leon.

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Does Brazil require mining companies to give 30% of their company to connected cadres? What about AA?

Mining is all very well, but the damage it dous to the ecology is of huge concern. One has only to look at the remnants of the gold and coal mining industries here to see the results of mining devastation – acid water, unstable ground, destruction of good farming lands etc etc, very little of which will be usable in future, if ever once mining is complete. Now we have Australian companies pushing hard to mine pristine areas of our coastline and prospectors looking to introduce gas fracking, putting scarce acquifer resources at toxic risk, all in the interests of pursuing “easy” money by destroying irreplaceable natural assets by exploiting wasting “assets”. We should be developing renewables that have longevity and the ability to sustain future generations, rather than satisfying profit seeking through the pillaging and destruction of our environment through extraction of materials that have a limited time scale. Our focus as usual is on short term exploitation rather than on long term sustainability, leaving scarring devastation of the natural environment in its wake. Humans are indeed a stupid, greedy, destructive, sorry species, that have squandered the innate intelligence with which they were endowed.

Anglo American, through its subsidiary, Kumba, and the dysfunctional SOE, Transnet, wreak havoc with iron ore dust pollution in Saldanha Bay, Vredenburg, Langbaan and St Helena Bay. Anglo refuses to take any responsibility for it. Hopefully the backbone shown recently by the district municipality will give them a wake-up. The municipality, which issues the licence to pollute the air, has refused to allow Transnet to increase export volumes because it says Transnet is not abiding by the conditions of its existing licence. The provincial and local municipality have also recently denounced Transnet for failing to observe a duty of care.

Those who are anti mining, and let’s face it, it is fashionable, should look around them. Try to name something that was not grown or extracted from the ground. You will be hard pressed to do so. Even the ubiquitous PC (computer) has a myriad of metals including aluminium, antimony, arsenic, barium, beryllium, cadmium, chromium, cobalt, copper, gallium, gold, iron, lead, manganese, mercury, palladium, platinum, selenium, silver, tantalum and zinc. Add the plastic components. These metals are not delivered refined by the tooth fairy but have to be mined. Yet the vile hypocrites rabbit on about mining sitting behind a PC in the comfort of a structure build from quarried and mined materials. No doubt with the benefit of air conditioning. It is not the greed of the mining company but the consumer who creates the demand for these commodities that are used to create PCs that access the internet.

Yes, there are externalities in mining. Externalities could include air pollution and acid mine drainage. Externalities are a case of where the free market breaks down which is why there is legislation concerning mining remediation and the treatment of tailings and water, for example. The legislation is there to ensure that the mining company does not pass the cost of mining onto society.

Or we can simply just ban mining. The forex used to buy the PC components, solar panels and batteries will come from the man on the moon. The mining sector ex employees will retrain and find employment in chip manufacture, hardware design, dog breeding and the new lithium battery factory. Or maybe not.

@RichardtheGreat wrote “The legislation is there to ensure that the mining company does not pass the cost of mining onto society.”

In a fantasy world, maybe

In our clear and present world, never !

Buddy, ever known a ‘harmless’ mine ?

Anywhere in the world…..name one, anywhere ?

At the very very least, even a ‘well intentioned’ mine will always be in debt to mother nature, as there WILL always be negative effects, of which there are so many its beyond the scope of this forum

But, the harsh reality is, our rampant over breeding self consuming species will continue on its path of destruction, despite the final costs, because of our very short sighted greedy nature

Period

Make up your mind- is it over breeding or mining that is the evil. Realitybites you are not offering any sort of solution. You are spewing forth an anti mining diatribe but in all seriousness you cannot be suggesting a world without the products we obtain from mining? Mines do not fall into the category of ‘harmless’ or ‘harmful’. The category in all correctly managed mining projects would be “net benefit to society” (forex earnings, the mined products, taxes, salaries and wages, infrastructure and a better life). You want to develop renewables? Where do the components for these said renewables come from. Where does the steel for the turbines/ pylons, the praseodymium-neodymium (rare earths) in the generator, the copper in the cables and the lithium/ cobalt for the storage batteries materialise? Where does the silicon, cadmium, tellurium, copper, indium, gallium and selenium in a single solar panel come from?

I think it is time for you to ditch the PC, the house, the car, the appliances and all modern comforts and move into a grass hut and burn cow dung for cooking lest your hypocrisy infect all those in a radius of six miles from your present location.

@RichardtheGreat – your knee jerk reaction is understandable, and typical of those who defend mining on the principle of risk/reward basis [ like the much touted excuse to accommodate the sprawling destruction of mother earth as we obliterate nature, all in the name of ‘progress’ ]

You wrote: “Make up your mind- is it over breeding or mining that is the evil. ”

Both……..as the insatiable human CONSUMPTION for the latest machines and gadgets spirals out of control, the 2 factors are inexplicably linked in a death spiral that wont/cant be unshackled [ just like your ‘reasons’ where you try to justify the need for mining ]

This reasoning of yours [ and many others] is precisely why we as a species are on an inevitable suicide mission

Call me a pessimist if you will…..I would call it realism

“Mines do not fall into the category of ‘harmless’ or ‘harmful’”

Oh yes they do…just like food can be healthy and UNHEALTHY

As I mentioned before, in an ideal world, a mine handled as stringently and conservationist as possible could LIMIT the toxic outfall, and be marginally beneficial to all in a strict ‘pro’s and con’ outcome as you have described below

However, as we humans have proved TIME and TIME again, our track record is abysmal

This same argument of yours could be applied to our weapons race – in an ideal world the intentions are good, and everybody is simply stockpiling to ‘defend’

But we all know deep down the inevitable outcome – and its not going to be pretty

Same with mining etc – do we really need that brand new mobile phone with all the bells and whistles, as ppl continually to devour through these environment destroying consumables…the latest flat screen tv…the 2nd SUV….new mp3 players… etc etc, fed by a corporate sponsored media goading a feeding frenzy that only gets bloodier as the churn increases

And its this destructive collective approach that will befall us all in a glorious meltdown in the end, of which mining and ‘progress’ will all play their roles

Its a race to the bottom, and we cant, or are not willing, to get off this escalator ride to hell

Don’t be ridiculous, RealityBites. There is no evidence that the primary economic activities mining or quarrying, which directly affect a minute fraction of the earth’s surface, can lead to humanities demise or any kind of collective meltdown (such melodrama) . Your comparison with a weapons race is a false analogy. Weapons are designed to kill. Mining is not. Your arguments are illogical and nonsensical. Why are you using 21st century technology, derived from mining, to communicate, when you should be in your grass hut or tending your maize fields with water drawn manually from a well?

@Frankpa…..100% agree !

In fact, we are a species self wired to destruct

End of story.

Having worked and lived in Brasil for +5 years, i can confirm that one of the major differences between our two continents -people, is that Brazilians treat all( who are born in brazil -be they of original asian/ african/ european or american decent ) as equal nationals of their country.

Then they often make use of “best of breed”( like referenced in this article where they are allowing independent -ie no government department staff to guide key aspects of growth for the economy ) government agencies will use , independent contractors even from overseas , if non suitable in country ( example their oil production industry ) leveraging off such contractors for in house training and skills transfer to bright deserving ( do read nepotism!!)young nationals to ultimately continue development and growth.

Also,all staff that work in all government agencies / departments even municipalities are selected without discrimination after writing national government employment aptitude and intellect ability entrance examinations.

Finally . Amahaq …the entire country suffered and does not look back – lay blame on the past ( the place for that is in the history books & museums ) !! Major lesson we after 24 years have yet to accept , there are to many unemployed people and ONE CANNOT CHANGE HISTORY , so they look only forward and hope the new leadership will facilitate and guide a better life for all – but at same time remain fiercely proud on thier place of birth
………………Can We Say The Same

Aptitude tests and exams – great idea. Make maths portion 60% of it. And passing level 80% minimum. Soon best of all races will change this disasterous socialist experiment in SA

Nothing to be learned here, once they done and resources have been depleted they will be disposing and selling all asset and moving to the next target

Hi Guys
The heading and article is about
“Lessons for SA from Brazil”

@RichardtheGreat wrote:

“There is no evidence that the primary economic activities mining or quarrying, …… can lead to humanities demise or any kind of collective meltdown”

Hahahahahahaha

Ok,now your ignorance or purposeful deception is showing up

In a nutshell for you, it only takes a SMALL toxic runoff to pollute a large body of water my friend, esp on the fragile micro cellular level where the harmful effects are only seen much later on

Mercury…arsenic…..heavy metals…pollutants etc etc etc…….the rap sheet of mining and its inevitable dark side

Now, take in the CUMULATIVE effect of all this destruction !!!!!!

https://en.wikipedia.org/wiki/Environmental_impact_of_mining
https://www.environment.co.za/mining/effects-of-mining.html
https://www.brilliantearth.com/gold-mining-environment/

Just type in ‘effects of mining’ in Google [ you dont even need to type toxic or disastrous before the key sentence…it AUTOMATICALLY shows up all the NEGATIVE effects…..]

Hundreds of Google pages depicting this !!!!!!!!

This disastrous side effect is KILLING off our water tables, rivers……marshlands [PS, when last have you seen one of those locally btw ?….goodbye to those fragile ecosystems ], forests/ air etc

Besides mining, our water supplies are in HUGE danger because of industrialization too

In Gauteng, the water table is close to being compromised, if not already, even a CENTURY after mining due to all the MEGA LITRES of arsenic runoff during gold mining back then:

https://www.iol.co.za/news/gautengs-acid-mine-water-time-bomb-1694066

Are you honestly fooling yourself everything is A-ok ??

“Your comparison with a weapons race is a false analogy. Weapons are designed to kill. Mining is not”

Unfortunately, mining by its very nature is DESTRUCTIVE

Period

It can never ever be without a trade off [ yes, the application of its produce is beneficial, but it comes at a HUGE COST ]

Just like a weapon can be totally harmless in its innate stage until triggered by a human, so it applies to mining

In other words, an error of COMMISSION, not OMISSION

“Why are you using 21st century technology, derived from mining, to communicate, when you should be in your grass hut or tending your maize fields with water drawn manually from a well?”

Again, as I STATED before in my prev thread, in an ideal world, a mine handled as stringently and conservationist as possible could LIMIT the toxic outfall, and the produce of mining feed back into society [ the plastics used in our computers/cell phones etc etc ]……………………………………BUT…… as we humans have proved TIME and TIME again, our track record is abysmal when it comes to mining

Period

So, arguing that without mining we wouldnt be able to type on this keyboard is limiting your argument to one side, akin to justifying that without war you wouldnt have peace

Without a DOUBT, humans are primarily driven by GREED and short sightedness, esp regarding the earth and the TAKE TAKE TAKE mentality we have perfected over the millenia,proven without a doubt so prevalent in the mining industry,……. resulting in an inevitable race to the bottom

RichardtheNOTsoGreat, one can only deduce as the one LONE voice DENYING there is a HUGE toxic attribute associated with mining reveals that you must be employed in the industry, or totally OBLIVIOUS to whats happening out there

Or possibly your coma has been induced by all the asbestos in your lungs

????

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