You are currently viewing our desktop site, do you want to download our app instead?
Moneyweb Android App Moneyweb iOS App Moneyweb Mobile Web App

NEW SENS search and JSE share prices

More about the app

Making sense of South Africa’s new mines minister

The appointment of Mosebenzi Zwane was unexpected.

JOHANNESBURG – President Jacob Zuma surprised everyone on Monday when he redeployed the existing minister of the Department of Mineral Resources (DMR), Ngoako Ramatlhodi, to the role of minister in the Department of Public Service and Administration. In his place, President Zuma appointed Mosebenzi Joseph Zwane as the DMR minister.

The appointment of Zwane comes as a surprise to the industry and organized labour based on his lack of experience in mining, especially when compared to the current deputy minister, Godfrey Oliphant. Oliphant was a mineworker and unionist before becoming a member of parliament and being appointed to the position of deputy minister. Until now, Zwane has previously served as an MEC for Agriculture and Rural Development, as well as Economic Development, Tourism and Environmental Affairs in the Free State provincial government. “Succession planning for the ANC has not necessarily seen line deputy ministers promoted into cabinet,” said Bo Mbwindane, a mining analyst and investor.

According to Mbwindwane, the surprise announcement need not be negative, as Zwane’s youth and government experience as a provincial minister gives him the capacity to get on with the job after induction.

The mining industry, which contributes around 7 percent to South Africa’s GDP, is currently struggling with falling commodity prices, declining productivity, and labour unrest, which is all threatening to contribute to further closures and layoffs. This makes the role one of the most challenging of any in South Africa’s government at the moment.

“It will be up to the new minister to re-assert the importance of continuing the dialogue that was started by minister Ramatlhodi,” said political analyst, Daniel Silke. “Whatever his own background or knowledge of the industry is, if he can manage the path of negotiation, business might not have a problem.”

Apart from the labour issues, Zwane comes in at time when platinum, one of South Africa’s largest exports, is trading at a six-and-a-half year low, which has been compounded by the Volkswagen emission tests scandal.

“The VW scandal may affect platinum mining and platinum demand if it turns out diesel cars are not that green. Diesel cars will not be hot again and it will call into question its use, [and] thus platinum’s use,” says Mbindwane. “This is a critical matter the industry and market must get on top of.”

The worry is that any European consumer reaction against diesel cars, all of which use platinum in catalytic converters, could exacerbate the already weak demand for the metal.

The current environment surrounding platinum and the wider resource market requires the new minister to have a skills set that will allow him to market South Africa as an attractive mining destination. “Marketing will have to focus on investors and users of the commodities we mine,” says Mbindwane.

Minister Oliphant, who has been with the DMR as deputy minister since 2010, will be key in managing the volatile labour relations. There is vital legislation that needs to be passed, and with all hands on deck, the new minister will find the counsel from Oliphant helpful.

Ramatlhodi has had a tough tenure during his relatively brief time as Minister. (He was appointed in May 2014). He faced intense criticism regarding a move to retract the license of coal miner Glencore over its plan to retrench workers.

Recently, questions have been raised regarding the disagreements between Ramatlhodi and mining tycoon Bridgette Radebe over mining deals. Radebe is married to Jeff Radebe, who is the minister in the Presidency. Radebe opposed the acquisition of Total Coal South Africa (TCSA) by Exxaro as she wanted to retain her Black Economic Empowerment (BEE) shareholding in TCSA. Ramathlodi did not agree, and sanctioned the deal. This put him at loggerheads with a very powerful group within the ANC.

So the timing of the appointment is one that raises more questions than answers. Such as, why has Zwane been appointed over an experienced figure in the mining industry? Did the feud between Brigette Radebe and the Minister have anything to do with the president’s decision regarding the reshuffle? If the issue at the heart of this kind of appointment is the vested interests of those close to power, what implications does it have for future ministers who will be appointed to cabinet?

“Another question to ask is, is politics trumping serious policy in the appointment of ministers in South Africa,” adds Silke.



You must be signed in and an Insider Gold subscriber to comment.






Follow us:

Search Articles:
Click a Company: