MINERAL Resources Minister Susan Shabangu on Tuesday defended the government’s track record in dealing with the mining sector, saying regulatory reform has unlocked development potential.
Delivering her keynote address at the Mining Indaba in Cape Town, Ms Shabangu said the number of mines in South Africa had increased from 993 in 2004 to almost 1,600 in 2011.
Associated revenue generated grew from R98bn in 2004 to R370bn by the end of 2011.
In the same vein, employment in the mining industry grew from just less than 449,000 in 2004 to a little above 530,000 in June 2012, before it started to regress slightly in the third quarter of last year.
"This performance is factual and demonstrates the vibrant nature of the South African mining sector, which continues to provide opportunities for both local and international investment.
"We will continue to ensure that an enabling environment is created, while at the same time developing an environment that is responsive to the changing global economic environment and the dynamism of the contemporary mining industry," she said.
Ms Shabangu said it was important for all mining stakeholders to be flexible and adaptable to the constantly changing environment to secure long-term business sustainability.
She also called for the government and the mining industry to work together to develop a competitive tax regime and ensure that the South African mining sector became one of choice for investment and for the rest of our continent.
“We observe with concern the focus on short-term gains that disregard the long-term prospects of sustainability. These practices are not in the interests of any stakeholder, including the shareholders as these are based on the principle of ‘downsize and distribute’ rather than ‘retain and invest’,” Ms Shabangu said.
She went on to say that the government could not overemphasise the importance of partnerships based on trust, shared vision and confidence.
"These partnerships must include workers as an integral part of the entirety of the mining value chain," Ms Shabangu said.
She said the government acknowledged the short-term challenges facing the mining industry broadly and the platinum gold and metals sector specifically, compounded by challenging global economic and financial growth prospects.
Audit and advisory firm Deloitte said Ms Shabangu’s address should be welcomed for its positive tone and the government’s acknowledgement of the major challenges the mining industry faced.
“Her comments, coming soon after those of Minister in the Presidency Trevor Manuel yesterday (Monday) calling for calm in the industry, indicate the gravity with which the government regards the role played by the industry in the national economy,” it said.
Deloitte said Ms Shabangu’s conciliatory tone should go a long way in building confidence and helping to bring together the industry’s stakeholders.
The minister’s address comes as confidence in the industry has been shaken by a series of issues, including labour and social unrest and uncertainty in commodities markets.
“Her comments on the legislative framework that the government is working on, and on nationalisation, should help bring more clarity and a more sense of ease among investors,” Deloitte said.
It added, however, that Ms Shabangu’s comments had to be followed by more engagement with stakeholders, if confidence among investors in the local mining industry was to be restored.
“More certainty is also vital if the industry is to operate optimally, and we believe that the comments by the minister are encouraging in this regard,” Deloitte said.
‘Lost touch with reality’
Democratic Alliance (DA) MP James Lorimer slammed Ms Shabangu, however, for trying to gloss over the issues plaguing the mining sector.
Mr Lorimer, who is his party’s spokesman on mineral resources, said Ms Shabangu had done a good job of pretending everything was “hunky-dory” in the mining sector. “It is a pity that she has lost touch with reality,” he said.
He said Ms Shabangu had tried to pull the wool over the mining sector’s eyes. “The minister has obviously been taking lessons from President Zuma, who attempted the same in Davos recently,” he said.
President Jacob Zuma insisted last month at the World Economic Forum in Davos, Switzerland, that the worst of the labour unrest in the mining sector was over. “Yes, we have seen the worst, we are dealing with the matter,” he said.
On Tuesday, Mr Lorimer said Ms Shabangu tried to say the right things and seem upbeat about the mining sector during her speech, but the picture was far from pretty. “Job losses, wildcat strikes, violence, decreased demand and government bullying are the key ingredients missing from the minister’s assessment,” he said.
The real problem in the industry, he said, was the toxic combination of a government that did not understand the economic realities of the industry and trade unions more interested in their own power and money than the jobs of their members. “Until the government takes the necessary steps to change this situation, we will not see growth and stability in the sector.”
Mr Lorimer added that conditions were likely to worsen if the government passed amendments to the Mineral and Petroleum Resources Development Act. Uncertainty would increase and investors would be scared off, which would result in a loss of jobs and money to the fiscus.
“Government policy on mining should be aimed at maximising employment and revenue for the fiscus, not hampering it,” he said.
With Zeenat Moorad