That South Africa’s gigantic mining economy is tailing off is not in doubt. The delusional view that mining in South Africa is in its “sunrise days” is mind-boggling. We keep hoping and praying that, like the proverbial phoenix, the South African mining economy will rise from the ashes.
The comment, attributed to President Cyril Ramaphosa at the 25th Investing in African Mining Indaba in Cape Town, suggesting that the local mining industry is in its “sunrise days” is far from the truth.
The 2018 placing of Mintails Mining South Africa into final liquidation is thus far the largest indication that the government is running a Ponzi scheme by trying to prop up a failed system, possibly for as long as the few can eat by cannibalising the many.
In the mining sector, the democratically elected government unknowingly inherited a poisoned chalice. This “booby trap” is about going for the kill, with its victims — communities, the economy, and the ANC — lined up and already pummelled into submission.
A sector that grew on the back of a history of dispossession, exploitation and discrimination on the basis of race and gender could not have had the foresight to transform itself in good time to put in place effective measures to address the dispossession of land and harm to the environment and health — the characteristics of mining.
This can be seen in the outcomes of recent court judgments. In the case Duduzile Baleni and Others v Minister, Department of Mineral Resources and Others; Case no 73768/2016) — the Xolobeni judgment in November 2018 — it is made clear that the granting of mining licences without the full and informed consent of affected communities is wrong.
Previously, the Constitutional Court held a similar view in the Lesethleng Community Village, North West Province matter (Maledu and Others v Itereleng Bakgatla Mineral Resources (Pty) Limited and Another  ZACC 41) ruling that “the existence of a mineral right does not itself extinguish the rights of the landowner or any other occupier of the land in question”.
Without the requisite mindset which recognises that mineral resources are the common heritage of all the people of South Africa with the state as custodian thereof for the benefit of all South Africans, communities will continue to resist mining on their land.
It is this lack of foresight that has caused mining in South Africa to remain a poster child of missed opportunity. A confluence of bad policy choices, arrogance and a failure to strive towards a point where everyone enjoys fundamental freedoms — a good education, good health care, and enough food — are critical stumbling blocks to progress.
Professor Paul Jourdan of Wits University decries the fact that the SA government has for more than 100 years treated minerals as if they were a banana crop, preferring to export them as a raw material instead of finished products. By failing to beneficiate and establish the forward and backward linkages to the non-extractive economy, South Africa lost an opportunity to invest in the produced capital and knowledge stocks required to offset declining non-renewable resources. Similarly, our mining failed to catalyse an agricultural revolution, sustainable power generation, robust manufacturing and — excepting finance — services sectors. This rendered the economy susceptible to external shocks, such as volatile mineral prices, exchange rates, oil prices and interest rates.
The low growth cycle and inflationary pressures at the back of rising and uncontrollable public debt are but an outcome of these bad past and present policy choices.
To some extent, the state of paralysis in South Africa’s economy can be blamed in general on the partial collapse of institutions of good governance in post-apartheid South Africa. The 2002 Mineral and Petroleum Resources Development Act sought to transform the mining sector to ensure that mining contributed to the development of local and labour-providing communities, and to transform the mining industry overall.
The Social and Labour Plan framework was deemed to be the appropriate fiscal tool to do this, containing binding regulatory commitments as licence conditions outlining deliverables per project in areas of human resource development, local economic development, poverty alleviation measures and other fiscal provisions which would have left a lasting legacy in mining host communities in terms of access and delivery of quality basic essential services. While a breach of the conditions is illegal, and the Department of Mineral Resources can suspend or cancel mining right once there is a conviction, compliance with these obligations remains low.
ActionAid released the results of its survey, the Social Audit Baseline Report, in Cape Town on the sidelines of the 25th Investing in Africa Mining Indaba to confirm this. The Department of Mineral Resources is also in no position to monitor and enforce compliance with these obligations. There is also no credible produced or reported data to suggest that there is an overriding intention among stakeholders to comply with these obligations or hold one another accountable.
These institutional failures do not only restrict themselves to Social and Labour Plan implementation as a form of benefit taxation. A recent spike in mine-related incidents, including deaths and injury of miners on duty, seems to suggest that the regulatory failures are widespread in areas of occupational health and safety too. Compensation for harm suffered as a result of working in mines through silicosis, tuberculosis and lung diseases are lagging, with a case backlog of just above 200,000.
Information and data management systems are absent, to the extent that even to trace survivors and families of victims is a mammoth task left to another day by incapacitated government institutions. While the legislation requires the setting aside of mine rehabilitation funds, mine closures are not done in a timely and environmentally responsible way that respects the rights of mining host communities.
The sector is shrinking, with many assets stranded or under care and maintenance, with the owners possibly holding on to their mining rights for speculative purposes.
This seems to be the case at least at Gloria Mine in Mpumalanga, where 20 people are feared dead after an underground explosion. These workers, who have gone unpaid for months, and who were possibly hungry and desperate, had no choice but to scavenge for copper and other metals to salvage to put food on their family tables. A sector that strips its workers of their last shred of dignity is not a forward-looking sector. DM
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