/ 5 February 2018

Mining Indaba: Baxter climbs into Zwane and urges new leadership

The Chamber of Mines chief executive said Mineral Resources Minister Mosebenzi Zwane’s actions had the potential to sink the industry
The Chamber of Mines chief executive said Mineral Resources Minister Mosebenzi Zwane’s actions had the potential to sink the industry

CEO of the Chamber of Mines Roger Baxter did not hold back in his criticisms of the Department of Mineral Resources (DMR) leadership at an early morning briefing ahead of the African Mining Indaba 2018.

Speaking to journalists on Monday, Baxter gave an overview of expectations for the industry in 2018 and reflected on the challenges of 2017.

“The challenge in the regulatory environment was the worst the industry experienced,” he said, referring to Mining Charter 2017.

He said that Mineral Resources Minister Mosebenzi Zwane’s actions had the potential to sink the industry. “The extent of damage to institutions, the economy and the mining industry particularly has been immense.”

From a regulatory execution perspective, the industry reached its lowest point, he explained. As a result the industry has brought four legal challenges to oppose the charter, but Baxter said ultimately the Chamber knows it will result in a negotiated outcome.

“The vision of a transformed industry is something all South Africans must develop together,” he said.

“One party can’t sit on one side and develop a vision for the future, while excluding other stakeholders.” Baxter said that developing a vision for the transformed industry is a team effort and not a unilateral approach.

The chamber has been engaging with other stakeholders about what such a vision should look like, but not with the DMR, he confirmed. The Chamber is engaging with “key leaders” of the ANC, he said. “Greenshoots are there and we are keen to work with government to get the potential of industry back on track,” said Baxter.

He took aim at the leadership of the DMR, saying that it requires new leadership, and improved governance to focus on issues holding back the industry. During a question and answer session, Baxter said the single biggest challenge for the industry was ethical leadership, good governance and policy.

He said that the Chamber is not engaging with Zwane because it has lost confidence in his leadership, as further negotiations which had taken place with the DMR were in bad faith. The court processes put in place were a last resort.

“We gave it a fair chance but the fair chance did not result in the outcomes within the national interest,” he said. The Chamber is of the view that there are still competent people within the DMR, he said.

Based on a survey conducted by the Chamber among its members last year, Baxter said findings showed better policy, governance and a regulatory environment, conducive for investment would see capital expenditure grow by 84% (a further R122-billion). Capital expenditure is currently R145-billion.

This would immediately generate 200 000 jobs in the industry, 48 000 of these being direct jobs. The impact of the investment would further reach the manufacturing sector and create employment there too, he explained. Employment in the sector has dropped by 70 000 in the past five years, according to the Chamber’s report.

Baxter stressed the importance of getting the industry back on track, for the benefit of the South African economy. The contribution of the industry to GDP in the third quarter of 2017 was 6.8%. This is slightly lower than the 7% contribution to GDP recorded for the year 2016.

Spring in mining blooming into Summer

Zwane was all smiles upon his arrival at the indaba, greeting Anglo American executives Chris Griffith (CEO of Anglo American Platinum) and Norman Mbazima (Deputy Chairperson of Anglo American South Africa).

During his address, Zwane noted that the industry has been in recovery, given the rise in commodity prices, upward trends in exploration, financing and mergers and acquisitions. The recovery in metal prices is expected to continue for the short to medium term, Zwane noted.

He also said that the recovery in the economy in mid-2017, following a technical recession, was a result of the mining industry’s contribution to growth. “The mining industry’s responsible for not less than 2% of growth in the period,” he said.

Zwane said that the department had been engaging with potential investors, who still appeared willing to invest given the transformation objectives of the country, but he made no mention of the charter. He said the Chamber is open to bilateral discussions with investors.

Zwane said that the inquiry into the Lili Mine incident, two years ago, was completed and that the DMR will get a report within the next few weeks. He said it is important to bring closure and finality on the matter. — Fin24