Tuesday, 05 February 2019

Minister Mantashe sets positive tone at Indaba

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The keynote speech by mineral resources minister Gwede Mantashe at Mining Indaba emphasised important issues for industry growth, such as community relations and infrastructure development.  But the right policy actions in the long term are needed to unlock investment. 

SA’s mineral resources minister, Gwede Mantashe, delivered a pragmatic opening address at the annual Mining Indaba in Cape Town this morning, indicating a depth of understanding of some of the issues that are holding back growth and investment.

Webber Wentzel partner, Jonathan Veeran said the minister’s summary of the state of the industry and the difficulty it faces in growing in a global context, without the benefit of battery minerals, was realistic.

“The mining minister has worked in the industry as a miner himself, and his familiarity with the issues underpins his realistic view.  He understands that SA needs to make structural changes to unlock investment.”

Mantashe possibly sees his role differently from his predecessors in bringing together communities, labour and mining houses, Veeran said.

Webber Wentzel had hoped the minister would address in his speech important issues like corruption, policy certainty and administrative efficiency, and he touched on all those areas.

“We would have hoped the minister would map a longer-term path for the industry over the next three years.  But he made no extravagant promises,” Veeran said.

Mantashe acknowledged the important role that infrastructure, and the costs of infrastructure, play in mining.  Although some areas are very efficient, like the manganese and iron ore lines and ports, he admitted that some work needs to be done on other areas.

He indicated a need to drive more exploration and said he has directed the Council for Geosciences to enhance mapping of SA’s orebodies.

Although there were some concerns expressed on social media that the minister would compel mines to share their exploration data with the Council in future, Veeran doubted that was what the minister intended.  He said the minister was probably simply suggesting there was a need for greater co-operation between mines and the Council.  In the past mines were secretive about their geological data.

Webber Wentzel partner Manus Booysen said having more geological data generated by the Council would not be enough in itself to trigger new investment.  Mining exploration companies also played a critical role in establishing the viability of new mines.

In the panel discussion that followed Mantashe’s speech, he emphasised the importance of communities and, although this might be seen as electioneering, he made some positive statements.

Mantashe emphasised that dissenting communities around the proposed Xolobeni mineral sands mine could not be allowed to usurp the power of the regulator to issue mining licences.

Webber Wentzel partner Rita Spalding noted that the minister said most of the Xolobeni community was in favour of mining but a small group against it was receiving a lot of media attention.

“I appreciated that he is our first mining minister to acknowledge that if the mines make no profits, no-one benefits,” Spalding said.

Booysen said the minister emphasised the need for a positive relationship between mining houses and communities.  “I believe he was sincere.  He emphasised communities’ responsibility in strengthening that relationship.  He also made it clear that it won’t help people to achieve their aims by disrupting mines, in fact it will delay results.  He said rather let operations continue while you negotiate.”

Webber Wentzel partner Johan Olivier welcomed the compact signed between government and its social partners ahead of Indaba.  He said it was a positive step towards bringing more stability to labour relations, as the signatories committed to good faith in dealing with labour disputes and dealing with Business' concerns about the trade unions' compliance with the law.  The trade unions that signed it included the NUM, Uasa and Solidarity.

Partner Lizle Louw said the compact in many respects repeated previous compacts signed between government, labour and business.  “But what is important is that two of the six commitments by labour relate to compliance with the legal framework.”

Olivier said he was concerned that the compact was not signed by AMCU, which is currently a major disruptor in the industry. “We would like to see government do more to bring AMCU into the fold to promote a stable and normal relationship between unions and business and among the different trades unions.”

Booysen said one of the speakers in the panel discussion, Mr George Cheveley of Investec Asset Management pointed out that one speech will not in itself promote South Africa as a mining investment destination.  Webber Wentzel agreed. “We believe that to change the landscape for investors, a lot of things still need to be done over time.  But certainly the minister seems to be moving in the right direction.”

“The minister’s speech should probably be seen as a scene-setter for the president’s speech to be delivered at Indaba tomorrow,” Veeran said.

“You cannot only look at one speech but how policy is carried out over several years. In his first year as minister, Mantashe has already taken some constructive actions, including re-establishing a positive relationship with the Minerals Council, rapidly revising certain policies and taking the contentious MPRDA Amendment Bill off the table.”