The 29 May polls and beyond — a policy wish list for the mining industry

A worker underground at the Gold Fields South Deep gold mine in Westonaria. Photo: Michele Spatari/Bloomberg via Getty Images

By Ed Stoddard

26 May 2024

The sector wants to take a good look at the effectiveness of the Mining Charter and other industry charters in addressing current challenges.

After the 29 May elections, South Africa’s mining sector wants to maintain recent progress made on the power and logistics fronts, and is calling for policy reviews of major regulations such as the Mining Charter to bring it up to date with the country’s current challenges

“What’s going to be important is that the momentum we have built so far with the policy reform on electricity and logistics continues and delivers, sooner rather than later,” Mzila Mthenjane, the CEO of the Minerals Council South Africa, the main umbrella group for the mining sector, told Daily Maverick in an interview.

Mthenjane was speaking on the sidelines of the Junior Indaba organised by Resources 4 Africa, where a major theme was the need for change to attract investment.

Progress has certainly been made in terms of power supply – Mthenjane was speaking on 22 May, day 55 of no rolling blackouts – and business and the mining sector have contributed in a big way to this achievement through self-generation projects. And the new leadership at state-run logistics provider Transnet has raised hopes that the logistics crisis can also be addressed.

“Transnet, that’s going to be critical. And the [Department of Mineral Resources and Energy] too. There is a need for government capacity-building… Government needs to reposition itself for a new future and the mining industry needs to reposition itself for a turnaround in the market and commodity prices,” Mthenjane said.

Mining Mzila Mthenjane, the CEO of the Minerals Council South Africa. (Photo: Supplied)

“We are going through mini transitions and what these indicate I think is that we have a better future to look forward to and a better future to work towards. And that after the elections we really need to come together as a nation, especially the major social partners such as government and business, labour and civil society, and really be clear about where we want to take the country.”

Read more in Daily Maverick: Mpumalanga has become a coveted coal black hole for SA mining applications

Transnet’s woes have inflicted massive costs on the mining sector and the wider economy. The Minerals Council South Africa has estimated that, between 2021 and 2023, South Africa lost out on R90-billion from coal and iron ore exports alone, which equates to 1.4 percentage points of GDP over three years.

“We need a significant amount of infrastructure, more than what we have on logistics. I like to think of the concept of mobility, which in its simplest terms is moving goods, services and people from one point to the other,” Mthenjane said.

Mining Charter reform

Asked about the Mining Charter and what post-election policy initiatives the industry would like to see in this regard, Mthenjane, who is thoughtful and measured, paused briefly to reflect. At coal producer Exxaro he had been head of stakeholder engagements and was involved in implementing all aspects of the charter.

Originally envisioned to rectify racial disparities in the mining sector and launched two decades ago, the charter has often been a bone of contention between the government and the industry, especially over some of its targets and the insistence that companies maintain certain percentages of black ownership in perpetuity.

“I often think and reflect on the Mining Charter in terms of ESG [environment, social and governance concerns] and how advanced it was in terms of its intentions on social progress, given the history of South Africa and the history of the mining sector particularly,” Mthenjane said.

“Implementing all elements of the Mining Charter, including the BEE scorecard, has taken place in a context where unfortunately we have been socially and economically deteriorating. And so what that has meant is that the effort of the Mining Charter has become grossly insufficient to address the social and economic needs of many communities that mining operations find themselves in.”

mining A worker underground at the Gold Fields South Deep gold mine in Westonaria, Gauteng. (Photo: Michele Spatari / Bloomberg via Getty Images)

He went on to say that a review of the mining and other industry charters was therefore required to consider their effectiveness in addressing current challenges.

“In essence, what they are doing is partitioning capital into localised efforts when actually we need a new model of social intervention by business. And one which pools the resources of business alongside the resources of government,” Mthenjane said.

He also noted how value can be diluted for other shareholders in BEE transactions – an issue that needs to be addressed.

“I think a fundamental agreement on how you achieve black ownership without destroying value for other parties at the beginning and the end of the transaction is important,” Mthenjane said.

“This is the kind of policy review I would expect but it wouldn’t just be targeted at the Mining Charter but I think the mining industry can certainly lead in that effort.”

The sector itself hardly has endless veins of capital to tap. The gold price has been hitting record highs, but South Africa only produces a fraction of the precious metal that it did a few decades ago. And the platinum group metals sector has been waylaid by a collapse of prices, triggering restructuring efforts and looming layoffs that could trigger unrest.

Then there is the revenue that the coal and iron ore sectors have lost because of Transnet’s meltdown.

But Mthenjane noted that there are untapped sources of capital that have already been allocated to communities through BEE and related initiatives.

“We are sitting today with a lot of money, which actually remains unused in the hands of communities. For different reasons it may remain unvested because of tensions within communities in terms of governance issues. And these are huge pools of funds, which could have significant impacts on the livelihoods of those communities.”

“Community trusts” set up by mining companies, notably in the former homelands, have often been flashpoints that have stirred protests and conflict over the capital, which, as Mthenjane pointed out, can remain unspent as a result. Some of it has no doubt been squandered or siphoned off as well.

After the elections, it will be of more than passing interest to see what policies are crafted to meet these many challenges. DM

This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R35.

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