South Africa moved Tuesday to assure mining executives that the country remains a safe destination for investment in the wake of deadly wildcat strikes, profit plunges and lay-off plans.
“We stand ready to work with all of you to ensure that we build a mining industry that is resurgent, resilient and is able to function successfully to its full realisable potential,” mining minister Susan Shabangu told thousands of delegates at the African Mining Indaba conference.
Shabangu’s speech was welcomed by the unrest-weary sector which saw strikes cripple mines last year, but executives present stressed an urgent need for an investor-friendly climate.
“South Africa will only succeed if it fosters an environment that is conducive for business and attractive to international investors,” said Cynthia Carroll, mining giant Anglo American’s outgoing chief executive.
“Creating that environment starts with the need for stable labour relations and the maintenance of law and order,” she said.
More than 50 people were killed last year when production at shuttered mines nose-dived and companies struggled to implement hefty pay hikes.
“Violence and criminality are always unacceptable and they must never be tolerated by society. We must never go back to those days again,” said Carroll.
Anglo American Platinum, the world’s largest platinum producer, on Monday reported a huge operating loss of 6.3 billion rand ($713 million, 527 million euro) for 2012 and the unit was recently slammed over its restructuring plans which could see 14,000 jobs cut and two mines mothballed.
Peter Leon, head of African mining and energy at law firm Webber Wentzel, appreciated the minister’s speech and welcomed South African President Jacob Zuma’s words at the recent World Economic Forum in Davos stressing that South Africa was open for business.
“But of course, what investors want to see now is reality,” said Leon.
“Is government going to not just talk, (but) actually going to walk these issues and deal with them in and effective and substantial way?”
Welcoming the tone of Shabangu’s speech, Sven Lunsche, spokesman for mining company Goldfields — hard-hit by last year’s strikes — said the relationship between the industry and the government was not good.
Another attack on the sector would have seen remaining investors turn around and say “we have no future here”, he said.
“So I think the tone at least was more positive, open to dialogue and so on, but it has to happen now. I think the industry has given and labour and government has given very little.”
Question marks still hover over the regulation of mining with legislation up for review and there is disquiet over the ruling party’s mulling of tax hikes.
“As it is, it is squeezed so much, a third of the gold mining industry, 50 percent of the platinum industry is already trading at a loss. We cannot afford new taxes,” said Lunsche.
Carroll stressed the need for a regulatory stability from investors.
“They will not invest if there is a fear of onerous and unpredictable regulatory changes, and nor will they invest if there is a threat that existing regulatory requirements will be enforced in an arbitrary and unequal manner,” she said.
One source of uncertainty, nationalisation, was shot down by the minister, but the year ahead could still be another tough one with more wage talks expected.
“If a wage strike takes place, it does not guarantee that we are not going to have violence taking place and we are concerned about that,” said Vusi Mabena of the Chamber of Mines industry group.