For many, many years the mining industry operated in South Africa almost as a law unto itself. It has milked untold riches from the country at the expense of the impoverished majority, been allowed to conduct iniquitous labour practices, and been given free reign to hoard mineral rights.
Now the worm has turned, and the industry finds itself confronting a state which in its proposed Mineral Development Bill creates the latitude to exercise extraordinary control of the industry.
The draft Bill is lovingly wrapped in the rhetoric of social justice, investment security and the good of all South Africans.
But the letter of the Bill does not match the rhetoric.
Even the Bill’s most ardent and conservative critics in the mining industry agree with the Bill’s goals to promote black economic empowerment in the sector, to free up unused mineral resources and to broach the inequalities bequeathed by the mining industry’s past. But, as we show elsewhere in this edition, it is the manner in which the state proposes achieving these goals that is the problem in particular the wide discretionary powers accorded the minister in terms of the legislation and the dearth of objective criteria by which such decisions can be judged. These powers would leave the industry with rather less of what investors most desire certainty.
For example, the section of the Bill which says that the minister must favour previously disadvantaged persons when considering applications does not specify any criteria by which the minister should judge companies representing such people. To date empowerment companies have self-evidently only benefited a small elite. Many are in fact creations of white business interests grasping opportunistically for a slice of the empowerment pie. Put simply, the scope for abuse is wide. Nobody has questioned the bona fides of the current minister or the current government. But, in the wrong hands, the Bill, in its current form, could easily play into the hands of the corrupt.
If the mining industry was still owned by randlords, it would be difficult to muster sympathy for it. But now, as the Chamber of Mines protests, the industry is 90% owned by local and overseas investment funds. On its prosperity depends the future pensions of millions of ordinary people.
In fact, every South African is invested in the industry. Its fortunes and misfortunes are inextricable from our own. When foreign investors get the wind up and they are already deeply worried at the provisions of the Bill, confidence in South Africa will flow from these shores as swiftly as it has during the HIV-does-not-cause-Aids and We-know-how-to-handle-Robert-Mugabe debacles.
Unfortunately, the Bill’s publication has seen South Africa split into entirely predictable, essentially racial camps. The National African Federated Chambers of Commerce (Nafcoc) and the National Union of Mineworkers wholeheartedly endorse it. The Chamber of Mines believes it fatally flawed.
Yet, if the Bill is passed in its current form, the miners whose pension funds are invested in the industry will suffer. Nafcoc members will struggle to raise capital for new mining ventures, and will be every bit as subject to the whims of government when it comes to actually running and profiting from their new businesses.
The powers of search and seizure granted by the Bill are extraordinary, a benchmark for the powers the department assumes for itself elsewhere. This is not a Bill written by people who consider themselves to be servants to the nation it is written by those who consider themselves the heirs to monarchs and chieftains, and their powers.
It has been said before that the African National Congress government has let itself down on crucial legislation because of the quality of its draftsmanship. The draft Mineral Bill, arguably one of the most significant pieces of legislation mooted by the government since 1994, exemplifies this problem. Government offers the assurance that the Bill will be submitted for Constitutional Court approval, a prerogative that is available to the president. The president can, however, formulate the questions the court must consider. In any case the government should not be talking so defensively at this stage in the drafting process, but should instead be honing a new draft that will easily pass constitutional muster.
As it stands, the Bill is at odds with the government’s repeated assurances that it wishes to encourage foreign investment. The mining industry is, after all, one of the few sectors of the economy which can provide jobs. The right Bill could build confidence in South Africa, attract new investment, lead to new jobs and increase prosperity for all. Foreign mining companies make it clear that South Africa is no longer considered to be a uniquely rich source of mineral wealth. We simply cannot afford to give them such good reasons for going elsewhere.
The industry, chastened by its greedy and exploitative past, has been incredibly muted in its protests. Already, those who wish to stay will say little for fear they will alienate the minister and her discretion. Those who are ready to go have no particular reason to speak.
The danger, however, is that no one will protest, and the industry will simply slip away in the night on the heels of Anglo American and De Beers, to more friendly shores and more comfortable capital markets.
ENDS