Mining: Appeasement hasn't worked

John Kane-Berman says the industry has been playing defence for far too long now

"Bad cop, good cop" and the South African mining industry

Spurning a last-minute invitation by the Department of Mineral Resources to attend a meeting prior to the recent launch of the new mining charter, the Chamber of Mines said it would not be "co-opted" into a "flawed" process.

The chamber says it will challenge the charter in court. It has also called on the African National Congress (ANC) to intervene. The problem is that the mining industry was co-opted a long time ago. It did so when it bought into the ANC's racial "transformation" process by adopting the first mining charter back in 2004.

Having conceded that "transformation" was "a national imperative",  the industry made itself vulnerable to the predictable game of shifting goalposts and escalating demands. As a result, the industry has been involved in a process of long-term state-assisted suicide, as shown by South Africa's slippage down the Fraser Index, which monitors the relative attractiveness of various countries for mining investment.

Enter the bad cop, 2017 style. This is the present minister of mineral resources, Mosebenzi Zwane. His third charter, which supposedly came into effect two weeks ago, has prompted the secretary general of the ANC, Gwede Mantashe, to warn against adopting a "reckless" approach to "transformation". Mr Mantashe has promised to raise the chamber's concerns with the ANC's "deployees in government".

This makes him the good cop. Another good cop, in this context at least, is the finance minister, Malusi Gigaba, who says that Mr Zwane should meet the chamber of mines urgently to ensure that mining policy does not "weaken the economy further."

According to the ANC, the chamber has asked it to mediate between the industry and the department. Bewailing the lack of consultation over the new charter, the chamber wants to go back to the negotiating table with government. It hopes the courts will order this. The chamber is reportedly confident of "an outcome that responds to the urgent national imperative of transformation whilst retaining the vision of a globally competitive mining industry".

Few of the players in this game will want to wait out an interminable process in the courts as the chamber challenges the charter on various grounds. So the best bet is that a new process of negotiation will eventually begin, where both the mining industry and the department will be under pressure to make concessions to one another. So, thanks to the intervention of the good cops, some of the worst features of the new charter might be watered down. Until next time, that is.

Why further "transformation" is so "imperative", the chamber does not say. It is a strange position to take when the chamber claims that its members have already exceeded the 26% black equity ownership target in the original charter, reaching an average of 38% at the end of 2014 at a cost of R205 billion.  Nor does the chamber explain why, against so much evidence to the contrary, it still believes that the "transformation imperative" is compatible with making the industry "attractive and investable".

Mr Zwane is planning provincial roadshows to take his new charter "to the people". Perhaps the mining industry should take its case against the charter to the people. It has for too long been on the defensive, accepting blame for the "legacies of the past" and the like. The result has been a strategy of appeasement, driven in part by the natural tendency of business to kowtow to government.

This might have bought the mining industry a bit of time but it has not prevented its decline. Present policies are far more damaging to the industry than history. Obsession with "the past" is indeed helping to undermine the future of the industry which, with sensible policies, could prosper again. It is time for its leadership to snap out of appeasement mode and take their case aggressively to the people of South Africa.                 

* 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, were recently published by Jonathan Ball.