An all too rare case of business leadership

John Kane-Berman says Neal Froneman's remarks are exactly what the ANC and govt need to hear

Neal Froneman, chief executive of Sibanye Gold, will no doubt be accused of being a white monopoly capitalist or whatever after his blunt warnings on Tuesday 25th April to the government about the future of the mining industry. He will no doubt ignore the abuse. He will no doubt also ignore all those in the African National Congress (ANC) who tell him "good riddance" just as they applauded the recent downgrades of the government's international credit ratings.  

Speaking at his shareholders' meeting, Mr Froneman said that his company would be "very careful" with any further investment in South Africa until it was clear that mining had a future here. Sibanye, which is a major producer of gold and platinum, has previously shown an interest in buying coal mines. Asked whether his company was still interested in such purchases, Mr Froneman said that he did not see any company being able to make further investments until South Africa "gets its house in order".

The company had cut back on capital projects to preserve cash. Also, however, "we do not know what the cost of doing business is here or if there will be business to be done here... Until there is clarity on the future and proper governance in place, I cannot convince shareholders to invest [in South Africa] any more. We really do not know if we have a future here."

Although Mr Froneman said his company was not planning to leave South Africa, it would for the moment look for investments elsewhere "in jurisdictions where we can defend our decisions to shareholders". The shareholders' meeting indeed approved the purchase of an American palladium and platinum producer, Stillwater Mining, for $2.2 million. This is the newish South African company's first offshore investment.

Mr Froneman's remarks are exactly what the ANC and the government need to hear. They are what other captains of industry need to hear. They are what the public needs to hear.

For too long mining, like many other South African industries, has pursued a policy of appeasement in the expectation that this will reduce political pressures upon it. That policy, as Mr Froneman observed some months ago, is a luxury that neither the country nor the industry can afford any longer.

The minister of trade and industry, Rob Davies, said that Mr Froneman should raise his concerns with Invest SA, his department's supposed "one-stop investment shop". His  department was "working to make the investment environment much easier for investors." Yet Dr Davies was himself responsible for the unilateral cancellation of 13 trade and investment treaties with European countries after his government had lost a case brought by a mining company whose rights had been abrogated. This makes his response to Mr Froneman merely frivolous.

Sibanye is not just another mining company seeking to limit exposure to South Africa. Many of the big multinationals, some of them born here, did that years ago. In May last year Mr Froneman said that erstwhile South African mining champions were "stressed and leaving" and that his company was buying their assets cheaply. "We see opportunity in South Africa. There are still lots of resources here." He has previously said he wants Sibanye to be "the new South Africa's mining champion".         

All the resources to which Mr Froneman refers will still be here whatever he does. The problem is that Dr Davies and his government's malevolent policies will also still be here. What is at stake is not just the interests of Sibanye's shareholders, but the survival of the mining industry. The battle to preserve it needs to move beyond appeasement to a major public education campaign to expose the threats and highlight the potential. Mr Froneman's warnings, let us hope, are the first shots in such a campaign. The entire mining industry needs to get behind him. So does everyone who wants to preserve that industry.    

* John Kane-Berman is a policy fellow at the IRR, a think-tank that promotes political and economic freedom. His memoirs, Between Two Fires - Holding the Liberal Centre in South African Politics, have just been published by Jonathan Ball.