Celebrate the miners

For a country whose industrialisation started with mining, we seem carefree at that sector’s demise. And why not? After all, we’ve progressed from farming to mining to manufacturing and now to a “service culture” tinged with IT, and isn’t that the natural order of things? Taking such a sanguine view could be an error, which may be why the ANC has scotched nationalisation talk in favour of a nebulous “windfall tax” that quite likely won’t find any windfall to tax.

This year opens with Harmony suspending production at Carletonville’s Kusasalethu gold mine because of violence there between the National Union of Mineworkers and its upstart rival, the Association of Mineworkers and Construction Union. Such union rivalry lies behind last year’s wave of strikes across especially platinum and gold mines, although union-inflicted killings of scabs virtually ceased after police shootings at Rustenburg’s Marikana. But law and order is far from fully secured, as the Harmony case shows and as outgoing Anglo American CE Cynthia Carroll pointed out late last year as greatest of the challenges facing miners in SA.

SA has declining grades of gold, coal and diamonds, while working with severe rail and power constraints (with the latter meaning an estimated R700 million loss to Anglo American in 2007). The country has skills shortages, declining relative productivity, a volatile currency, and perceived political risk to mining investors. And so there should perhaps be little surprise that Deloitte estimates that most mining investment until 2031 will be found in Australia. SA is way down the list, predicted to get less than the Dominican Republic. This while miners (latterly “mineworkers”) now form only 2,4% of our workforce, says Stats SA.

Meanwhile, government isn’t helping and infrastructure neglect costs us dearly. Delays in upgrading the Sishen-Saldanha export railway line cost Kumba Iron Ore R3 billion annually, and we can’t get enough coal to Richards Bay and onto to a China whose insatiability for new power stations may anyway start to ebb.  The Chamber of Mines reckons we lose up to R10 billion in mining investments every year through regulatory constraints. New order mining rights, with onerous and often contradictory non-mining conditions, are imposed by national and provincial governments willy-nilly.

Environmentalists vehemently oppose, sometimes more with emotion than logic, even mining exploration, never mind the diggings on which SA depends more than is perhaps realised .

Mining matters hugely to our wellbeing. Its exports make up 40% of our total and it contributes 19% of our GDP. Mining accounts for a third of capital inflows to SA and pays up to 20% of our direct corporate taxes. Our mines are the biggest investors in private community development and spinoffs include their having 68% upstream beneficiation compared to the international average of 57%.

With an economic growth rate of little more than 2% a year, South Africa would do well to look after this golden goose. Exploration (now at half its global share in 2003) should be encouraged, not thwarted by romantic notions. Rail infrastructure upgrades should be prioritised to accommodate miners. New taxes should be shelved or never implemented. We should celebrate and help our brave men and women in their hard hats.

(Published in The Citizen, January 2013)

– By Paul Pereira