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The road to recovery

Getting SA mining back to where it should be.

One of the questions that has been asked the most at this year’s Investing in African Mining Indaba is: “what needs to happen next in South Africa?”

Delegates have expressed a sense of optimism about the changes that are happening in the country, but still recognise that there is a long way to go. The mining industry has suffered under policy and political uncertainty for many years and there is recognition that solving its issues won’t be quick or easy.

“What we are starting to see in South Africa with the moves towards political stability is encouraging,” says Wandisile Mandlana, a partner at Bowmans. “But once we get that, we must not lose the momentum.”

Credible leadership

There is broad consensus that there has to be a change of political leadership to move things forward. The Minister of Mineral Resources, Mosebenzi Zwane, has lost the trust of the industry.

“I think people are looking for a change of leadership, and then the key will be who the new minister will be,” says the head of the mining sector group at Bowmans, Charles Young. “Is it someone credible, do they have industry buy-in, and what is their attitude to investment?”

Mandlana believes it is imperative that policy certainty follows any change of leadership. There must also be consistent implementation of that policy, which means improving capacity at the Department of Mineral Resources.

“It’s not only political leadership, but at a technocrat level we have to ensure that the people there are not only highly skilled but have [the] trust of the industry and can work for the benefit of all stakeholders,” Mandlana says.

This is a theme that has been aired many times at the indaba. South Africa’s mining future depends on not just developing a business-friendly environment, but one where all stakeholders have a voice.

Engagement

“What I hope will happen under new leadership is that a proper constructive discussion will take place with the inclusion of community and labour,” says Young. “It doesn’t make any sense to have just a bilateral engagement between government and business. You need a proper, constructive discussion between all stakeholders around what is going to be the actual vision for the South African mining sector and how we are going to achieve it.

“There is significant distrust between a lot of stakeholders,” Young adds. “Until we bridge that and start having proper conservations I don’ think we are going to get very far.”

Part of this means developing a Mining Charter that expresses the shared interests of all stakeholders. The Chamber of Mines has made it clear that its objections to the 2017 Mining Charter, unilaterally announced by Zwane, should not be seen as an objection to the principle of developing a shared framework for the industry.

“The chamber appreciates that a new Mining Charter has to be developed, and the chamber knows that the preferred solution to this matter is a negotiated outcome between all interested parties including government, organised labour, community representatives and NGOs,” says its CEO, Roger Baxter.

Investor interest

In this process, it will be crucial that hard questions are asked.

“We must not miss the opportunity to take a step back and look at what are some of the other issues that cause unrest,” says Young. “Things like social labour plans that are formulated without proper engagement with local communities and local authorities.”

South Africa now has the opportunity to realise this kind of sustainable future for the industry. There is a strong feeling that this chance should not be missed.

“A lot of people just default to being negative,” says Young. “But we are quite bullish about the South African story, particularly in mining. In the last six weeks we have seen a huge increase in interest both in terms of local operators rethinking their strategies and multinational investors looking to come into this sector. The phone has been ringing off the hook. Imagine what’s going to happen if there is a change in leadership and someone with credibility comes in? I would expect the next few years to be very positive.”

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