Mineral Reseources Minister Mosebenzi Zwane's links to the Guptas has irrevocably destroyed his credibility.
Close to losing his voice and looking terrified, Minister of Mineral Resources Mosebenzi Zwane gazed out at the packed room on day one of the Investing in African Mining in Indaba in Cape Town last week.
He’d neatly managed to avoid mentioning his collision course with the Chamber of Mines in court over the Mining Charter during his earlier opening address to the largest mining event on the continent; but this session was billed as a Q & A.
Spokesperson Fidel Hadebe was up to the task of protecting his principal. He threw Zwane some softball questions and then repeatedly warned the media, executives and investors that no questions related to anything except mining would be allowed.
It was just over two weeks since the National Prosecuting Authority’s Asset Forfeiture Unit (AFU) had been granted a court order putting the Vrede dairy farm under curatorship and freezing the R10-million Atul Gupta had allegedly received in the scheme.
The AFU accused Zwane — who was Free State MEC for Agriculture at the time — of paying R220-million to the Guptas in a “scheme designed to defraud and steal monies from the department”. The money was intended to help poor black farmers establish themselves.
Zwane has claimed ignorance of the scheme, maintaining he only oversaw the department and wasn’t aware of the nuts and bolts of transactions.
Zwane’s track record includes having famously flown to Switzerland to negotiate the sale of the Optimum Tegeta coal mine to the Gupta family, negotiating the purchase of the Optimum Colliery coal mine from Glencore, and subsequently missing several parliamentary sessions probing state capture. This has understandably left the mining industry in a state of anxiety.
During the time he’s been facing these controversies, Zwane has been leading a charge for “transformation” in the mining industry. His vision is contained in Mining Charter III, which is subject to a court challenge — beginning on February 19 — by the Chamber of Mines. The chamber claims it wasn’t consulted about the far-reaching changes.
In a nutshell the 2017 Mining Charter requires mining companies to raise black ownership levels from 26% to 30% within a year. Licences for new prospecting rights will only be granted to companies with over 50% black ownership. Mining companies are also required to pay 1% of annual turnover to the 30% black shareholders, who often become indebted when they buy their shares.
In a country where mining was at the heart of many of the apartheid laws and legacies which ripped families apart, left illness and death in its wake and failed to protect the environment, it’s difficult to argue against Zwane’s vision.
The Chamber of Mines, which has a long, shameful history of directing government policy under the apartheid regime in order to ensure a constant supply of cheap labour, has managed to turn itself into the hero in this story.
The industry umbrella body briefed the media on day two of the Mining Indaba. The besuited executives explained they’d already started negotiating directly with affected parties in the mining industry. The South African Council of Churches offered to be a broker, to ensure communities are represented.
Their main opposition to the Charter as it currently stands is the lack of certainty it offers investors who are ready to pour billions into sinking a shaft, only to find in five years that the ownership requirement has changed.
A Cyril Ramaphosa presidency is clearly in sight. He’s calling for an urgent resolution to the stand-off, and the Chamber of Mines is already planning for a post-Zwane mining environment.
Both he and the chamber spoke at the Indaba ad nauseam about their willingness to engage with each other to avoid the court battle, but the industry body added the caveat that it would only be willing to sit down around the table with “ethical and credible” people.
Lurking as a reason behind the opposition to the Mining Charter is the question of who the department of mineral resources will ensure receives the new prospecting rights. Could there possibly be a wink and thumbs-up for companies who include certain families in their deals (as naturalised citizens, the Guptas add to BEE points)?
The new mandatory 30% shareholding includes workers, entrepreneurs and communities, but instead of leaping at the opportunity, the two largest unions in the sector — the National Union of Mineworkers and the Association of Mineworkers and Construction Union — distrust Zwane because of his Gupta links, and have called for his removal.
Zwane and the rest of the senior South African government delegation were missing at the Mining Indaba from day two, moving a couple of kilometres up the road to Parliament, where the State of the Nation Address was indefinitely postponed and President Jacob Zuma’s future hung in the balance.
Other African mining ministers and delegations could be seen striding the halls of the Cape Town International Convention Centre, attending investors’ breakfasts and conducting interviews with journalists.
The South African government officials appeared to be preoccupied with the chaotic political situation; or perhaps they didn’t want to have to be asked to explain the differences in attitudes toward the Mining Charter, by Zwane on the one side and Ramaphosa and Finance Minister Malusi Gigaba on the other.
Zimbabwe and the Democratic Republic of Congo (DRC) were among the shiny new toys investors appeared excited about at the Indaba. Zimbabwean Mines and Mining Development Minister Winston Chitando couldn’t emphasise enough that the country is open for business and intends to clear all hurdles for investors after the elections this year, sending a strong indication that President Emmerson Mnangagwa will lift the 50% +1 Zimbabwean ownership requirement for mines.
The DRC owns three-quarters of the world’s cobalt reserves — the essential commodity for rechargeable batteries and electric cars — and with long-time President Joseph Kabila promising to step down at the end of the year, investors are already sensing change in the air (though Kabila is yet to sign a bill which will increase mining royalties and taxes for companies).
Absent from the sense of optimism engendered by the rise in commodity prices and new opportunities for previously niche minerals was Tanzania. The east African country had no display stall in the cavernous main hall and its mining minister — billed to speak at event — was replaced at the last minute by Ethiopia’s.
The Tanzanian government announced broad changes to mining regulations last year, leaving international companies outraged. They require all major mines to list on the Dar es Salaam Stock Exchange, and 30% of all shares are reserved for Tanzanians.
Perhaps government officials didn’t want to face questions from hostile potential investors or the media in a public setting.
On the fourth and final day of the indaba, when most delegates already had one eye on shopping and the beach, South Africa’s Deputy Minister of Mineral Resources Godfrey Oliphant spoke at a breakfast discussion.
Although the room was emptier than usual, there was the usual crowd of bankers, international suits and big mining companies represented, as well as mining students from several universities.
Oliphant hovered the spectre of nationalisation over the local industry, a policy dismissed by the ANC at its Mangaung conference in 2012. He told delegates that the agricultural industry had refused to transform and the ANC, at its December 2017 conference at Nasrec, had been forced to adopt the land expropriation without compensation policy in order to hasten the pace of land reform.
Turning to the mining industry,Oliphant said the ANC might have to open up debates again that “they don’t want to hear” — hinting at nationalisation.
Oliphant is a former mining unionist, an MP since 1994 and deputy minister of mineral resources since 2010. He sounded more radical than Zwane with his pleas for “transformation”, yet he received applause at the end of his address. He told the audience he’d met with the Chamber of Mines the previous week to discuss the Mining Charter (the chamber refuses to interact with Zwane).
Oliphant and Zwane may have similar messages for the mining industry, but while Oliphant is respected for his work in Parliament and his knowledge of the sector, Zwane is seen as a Gupta stooge.
So far it’s been easy for established interests in all sectors to dismiss the calls for transformation because the government messenger was tainted. If the ANC is serious about changing the lives of millions of South Africans, it needs to put people who cannot be easily dismissed due to their own misdemeanours front and centre of their charge.