Every Friday morning, SAfm’s AMLive’s radio anchor Sakina Kamwendo speaks to Martin Creamer, publishing editor of Engineering News and Mining Weekly. Reported here is this Friday’s At the Coalface transcript:
Kamwendo: Deputy President Cyril Ramaphosa this week made a strong call on the CR17 website for an end to the deadlock in the South African mining sector.
Creamer: It is a fantastic article authored by Cyril Ramaphosa the Deputy President and it is on the website CR17 and it uses the word urgent quite a few times. It also reflects on what can be in South Africa and the nasty situation that we have got here. He is calling for action in the mining sector and the breaking of the deadlock around this regulatory uncertainty.
Because if you want to have transformation then you must break this regulatory uncertainty. He makes the point that other countries are having to incentivise mining at the moment, we don’t even have to do that. All we have to do is get down and fix our policies and legislation. That is not a hugely expensive thing, not the sort of expense that other countries are going into to stimulate mining, because greenshoots are appearing for the next upturn.
We missed the last up turn really badly. Are we going to miss the next one? He is saying remove the policy uncertainty, root out the corruption, reassert South Africa’s positive position in mining. We have got world-class assets, better assets then Russia and Australia, which are the other two in the race. Why aren’t we doing this to create jobs? He is saying let’s go for dynamics, let’s have a recovery process and urgently get going on this.
His particular article, which was very enlighting, because he goes into a lot of aspects in the economy including mining, but not just about mining. This coincided with a survey by the mining industry itself saying what could have been. What would the industry have looked like had we had the proper regulatory framework and we didn't have the mining legislation that is just in limbo. They are saying that it would have been a different industry even in the downturn, because what has happened now is that it is smaller now then it was in 1994. So, in 23 years it shrunk.
There is no other desitination in mining that has happened to. There has been growth even in this downturn in the other sectors. It has not been as vigorous, but it has been there. In the same period the survey done by the mining industy shows that the banking industry has lifted by 140% since 1994. So, mining has been particulary penalised the whole legislative attitude has been so poor that there has been an absolute freeze on investment at the moment.
The only investment that is going into mining is what they call stay in business, where you have to just make sure that your operations just keep going and that is the capital that goes in. Otherwise it is not happening in mining, it is such an important industy, so many linkages that can be introduced. So many engineering, banking and transports spin offs and therefore so many jobs spin offs at a time when 28% of people are unemployed. That is the official figure and some youth have never had the privilege of seeing a job interview, nevermind getting a job.
We have to look through a youth lens as Cyril Ramaphosa says on his site with this very good article on the economy. He has had a whole series of those, everything must be looked through a youth lens at the moment, because there is such a need for employment among the young people of South Africa.
Kamwendo: The question is does ANC policy mirror what Cyril Ramaphosa is saying.
Creamer: Well we have a very important meeting that we are going into at this weekend and we hope that we have some positives coming out of that. That was quite a good interview we heard with Deputy President Cyril Ramaphosa last night and hopefully this will be an exemplary meeting at the weekend and we won’t have horrible disruption.
Kamwendo: The United Nations was in town this week to plead with South Africa to build resilience into its mining economy.
Creamer: Exactly and that it the United Nations Conference on Trade Development known as UNCTAD. They came in here with their study which they do every two years and they flashed up maps which show you that Africa is just commodity dependant. South Africa not as bad as the rest of Africa but Africa is a continent that is commodity dependant, all around mining and agriculture.
They are saying get that act together, you have got to realise that you have got to have resilience. If you are in the commodity market it goes up and down, so prepare for that, governments. When you have got a boom, put that money in the bank and have it there ready. If you have a downturn, spend it.
That is the way to do deal with this issue. That is not happening in South Africa or Africa and they are saying we need to encourage these developing economies to have resilience and the only way to do it is to have good thinking in advance of your problems. So, they have given this outline and they used the Industrial Development Corporation as a launchpad of this blueprint for how to do well when you are a commodity economy and Africa is just full of them.
South Africa, of course, relies heavily on its commodies. Some of the budgeting is done around that and you have to be careful what you do when you plan ahead.
Kamwendo: Clever local project companies are snapping up business opportunities in Africa on the back of Australian and Canadian investment on the continent.
Creamer: There is no investment in South Africa. We have got a lot of project companies. What do they do? They have to look outside the country, so they follow the money.
They take a trip to Perth and even to Paris, because of the French speaking countries in Africa. They have to see where the investments are and who is doing that. They are finding a lot is coming from Canada and from Paris. If you want something in the Francofone countries, you have got to go through Paris.
They are pounding the pavements and they are searching and solving. The one big thing there is their experience in Africa. One of the companies Erudite, which was just launched, the Australians fell over it because it can give it owners engineering teams without them having to put a lot of money in and then they do the work for them in a rand based low cost environment.
So, it was a no brainer, one of the companies they touched sides with sixteen of their clients that were falling over them with projects in Africa.
Kamwendo: Thanks very much. Martin Creamer is publishing editor of Engineering News and Mining Weekly.