Former Mineral Resources minister Ngoako Ramatlhodi was unexpectedly replaced by Mosebenzi Zwane last year. Picture: TREVOR SAMSON
Former Mineral Resources minister Ngoako Ramatlhodi was unexpectedly replaced by Mosebenzi Zwane last year. Picture: TREVOR SAMSON

ALL eyes will be on SA’s third mines minister in three years when he addresses the annual Mining Indaba in Cape Town on Monday morning against the backdrop of enormous regulatory uncertainty, global turmoil in commodity prices and a host of cost and labour pressures in the industry.

This week’s Mining Indaba, which will be attended by about 6,000 delegates compared to last year’s 7,000, comes at a particularly difficult time for the global mining sector, and the domestic industry in particular. Slowing demand from China — once the engine of commodity-demand — and an oversupply of some commodities is pushing prices down, severely straining companies’ balance sheets.

In SA, the sector is not only contending with international pressures, but also regulatory uncertainty, with the long-delayed bill amending the Mineral and Petroleum Resources Development Act returned to Parliament by President Jacob Zuma over concerns that certain clauses could raise constitutional and legal challenges.

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THE Mining Charter, already in its second iteration, will also be revised this year by the Department of Mineral Resources and major stakeholders. Mineral Resources department director-general Thibedi Ramontja resigned unexpectedly at the end of last year, not long after Ngoako Ramatlhodi was removed suddenly and replaced by Mineral Resources Minister Mosebenzi Zwane.

Zwane courted controversy by travelling to Switzerland to visit Glencore with a delegation from Gupta-owned Tegeta Exploration and Resources to negotiate the purchase of the global commodity group’s Optimum Colliery. The Gupta family is close to Zuma and his family. Zwane said his involvement in the purchase was aimed at saving jobs at the colliery.

Indaba delegates will want to hear what the department plans to do about the regulations; whether it can placate investors worried about the investment environment in the mining sector; and their concerns about corruption and infrastructure constraints including electricity and water.

The market wants to hear what strategy Zwane and the department have in mind, how it would execute those plans, and a time frame, says Jacques Erasmus, head of mining at KPMG.

"Everybody is there and people go with an open mind to hear what people have to say, so it’s a good platform for the minister to have," he says.

Zwane, who has said a review of the Mining Charter would be completed by the end of April, says he has a clear message to deliver at indaba.

"The indaba will look at ways and means of reviving this industry and part of that revival is … black economic empowerment. We are going to look at ways to enable them not to depend on other role players, but to give them enough resources to make them black champions going forward," he says.

Another speaker who will be closely watched is Anglo American CEO Mark Cutifani. Next Tuesday, the company will unveil details of its restructuring — either selling mines, closing them or striking up joint ventures on assets as it streamlines its portfolio to between 20 and 25 mines from the 55 it owns now. About 85,000 jobs will be removed from the payroll.

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IN HIS keynote speech on Monday, Cutifani is expected to address the global commodity market and the effect of weak demand and falling prices on companies such as Anglo. He could set the stage for Anglo’s review and annual results announcements.

Absa Capital head of investment banking in Africa Philip Lindop says metals and minerals have not reached the bottom of the price cycle and there could be a further 20%-30% downside for various commodities compared with the end of last year.

Erasmus says one of the major benefits of the indaba is hearing a broad range of views about the markets and its participants.

"You meet individuals at indaba who have views from across the spectrum, and that’s what I like about the indaba: it keeps your own views grounded," he says.

Another long-time participant laments the changes that have crept into the gathering — turning it into a trade show, with service and equipment suppliers dominating the exhibition space once occupied by a broad range of mining companies and in which senior management can be found at company stalls.

Without those companies inside the venue, with many tending to set up base in nearby law and auditing firms or in hotels around the conference venue, investors ponder the merits of attending the indaba if all the people they wanted to meet may not be there, says the participant, who asked not to be named. His company has scaled back on the number of delegates attending for this reason.

"For the past two years, we have worked diligently to reaffirm our focus on mining companies and investors," Mining Indaba MD Jonathan Moore says.

"On both fronts, we have seen improvement, despite a very difficult market for miners. Our mining company representation at the indaba is this year over 200 companies," he says.

The indaba management has stepped up its focus on making the conference more meaningful for investors and to ensure they meet who they needed to meet, Moore says. Indaba launched its VIP Investor Programme last year and the number of strictly vetted investors has doubled since then, he adds.

Addressing concerns, particularly from South African delegates, about the cost of the event, Moore says the dollar price of a ticket has "remained consistent for the past three years and when compared to other global mining events, Mining Indaba is very competitively priced for four days of content and networking, which includes all our materials and food functions.

"What has been a reality is that the depreciation of the rand has meant that delegates from SA have seen a material increase. We have worked aggressively this year to manage this with key clients, sponsors and exhibitors."

For an individual delegate, the cost of attendance is £1,140 or R26,300.

One delegate says a number of events have sprung up around the indaba, with other conferences set up to lure participants.

"I have at least as many appointments outside the conference centre as inside," the delegate says.

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A SECOND, very disgruntled investor, says he would no longer attend the indaba, and will instead meet and network with CEOs and other delegations at other Cape Town venues, while taking advantage of site visits arranged by mining companies before and after the event.

"This is the first time in many, many years that I’ve decided enough is enough and I will not pay the exorbitant charge for a conference which does not deliver — new owner or not. It is a glorified trade show," the investor says.

"Mining companies and investors are thin on the ground inside the conference. Indaba was a venue for investors and mining companies. That is what it was all about.

"It was a great one-stop way to see all the mid-cap Africa companies and some small-cap companies too. It was a way for investors and mining companies, with the bankers in the background, to advance the cause of mining in Africa."