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: Botswana is going all out to attract the global mining investors that South Africa’s controversial new Mining Charter is frightening away.
Creamer: Having just come back from Botswana I see a sharp contrast between the new young Minister of Mineral Resources of Botswana and our new young Minister in South Africa. It is like a tale of completely two different cities, because we see that the Botswana Mineral Resources Minister Sadique Kebonang expressed determination to make his country attractive to investors, particularly mining investors.
That was at a global conference in Botswana speaking to the global investor community. It is also very interesting to see his new title, which is not only Minerals Resources, but it is Green Technology and also Energy Security. That is an important aspect because Botswana is realising that one of its biggest assets are the sun and also its big desert space. They are saying, way don't we go straight into solar power, because then we could be generating that electricity in a way that we can get funding from the world, rather than going the hard coal route.
Their thinking is very modern. Contrast that with South Africa. You come down and see this new Mining Charter Three which is a devastating blow to the industry. I spoke once to this very top investor and I was saying to him why are you going to Chile, you are South African, you should be investing in South Africa.
He said he goes to Chile, because when he goes there they roll out the red carpet for him. When he comes to South Africa, they wind him up in red tape and he absolutely can’t invest, there is no ways that his shareholders would agree with investment. That is the difference we see now between South Africa and Botswana.
They are rolling out the red carpet and we are rolling out the red tape, to such an extent that one investor said to me it is like you saying cars don’t need round wheels anymore, they can have square wheels and they will bounce along. Everytime the car stops, someone sticks a hand in the window and takes 1% of the value of the car. This is what our Minister is proposing. It is unprecedented in the world.
This has taken South Africa right off the investment map, South Africa is not even an alternative investment destination anymore. In the meantime, we see the Minister persisting with this, even though communities are complaining. The Bench Marks Foundation that is very close to the communities put out a statement this week that this new charter is more dangerous to South Africa than an abandoned mineshaft.
The community is not being helped by this, not even consulted. Who is actually putting the input in here? It is such a curious input that our Mining Charter Three has, that it is really going to damage us quite seriously.
Kamwendo: South Africa’s contentious new Mining Charter has opened the way for Brazil to make its debut into platinum mining.
Creamer: We have never associated Brazil with platinum. I didn’t even know they had platinum. But, of course, they look at South Africa and say this is the big platinum area, let’s try and find some. Now, they found some. They run off to London and say that South Africa is going one way, that platinum is not going to be reliable anymore.
This week they said London investors must come and invest with them. South Africa can’t produce anymore, look at it, its standing still, its production is going backwards in platinum. We will be able to, next year, give you platinum. Then it rushes to its shareholders and says we are not deep, dark and dangerous like South Africa, we are sunny and on surface, we can have much lower costs. So, of course, they are going to get shareholder backing.
This is what happens. You can expect your big endowment in minerals to attract everybody, but they go elsewhere if you block them. In mining, money is so crucial because you need deep pockets and people who are prepared to wait over a long period of time. This is what our Minister Mosebenzi Zwane does not understand. He has put through 1% all over the place and not even going to the Treasury.
It is going to an agency that hasn’t been formed yet. They haven’t spelled out what the governance procedures are going to be, who is going to monitor and audit this. It is just so unclear that it is exceedingly worrying.
Kamwendo: South Africa’s new Mining Charter is also poised to clash head-on with long-standing global trade agreements.
Creamer: It is just a situation where there are agreements. We are signatories to a long standing agreements. The agreement on tariffs and trade called GATT.
We have been signatories to that for a long time and it also has a services side that we have signed onto and that makes it very clear that you can’t just gerrymander with the way you treat people who are trading with you. You can’t just suddenly give South Africans a fantastic advantage over the foreigners and then expect them not to complain.
We are all members of the World Trade Organisation (WTO), they will run off to the WTO as quickly as you can say Jack Robinson. They will start complaining and tying us up in big problems. We know that mining gives you half of your foreign currencies, even in its battered state with bleeding here with a quarter of your exports you get half of foreign currency. Without foreign currency what can we import?
We won’t be able to import the things that he says he is going to tax the foreign importers on. He is saying that if you bring in equipment here and it is foreign source, we will take 1% of the revenue. Again this 1%, he also got 1% of the new 30% holding by the 14th of June next year, there has to be an empowerment of 30% and it has to be the same BEE partner and that partner gets its 1% off the top.
Kamwendo: This is one of the questions I asked earlier in the week on Monday when we were having this discussion, because if this is about empowerment, why are we not opening it up for new players to come in. So you are essentially saying let’s give more to those who are already empowered.
Creamer: And put them infront of the queue. Just on the revenue side, no matter if you make a profit or not, 1% of that revenue has to flow into this 30% BEE company. That just breaks the law, it seems to break just about every law that there is. The Companies Act is being breached, the Constitution looks like its being breached and also, I don't think the Minister understands that he doesn’t even have the power to do this gazetting, because there is no legal background yet.
The so-called MPRDA, that is the main minerals legislation, that is still stuck in Parliament, it hasn’t been passed. So he hasn’t actually got the power to do it. I don’t think he has looked into this very clearly, but, of course, the ANC Policy conference is next week, maybe he has got his eye on that.
Kamwendo: He was called to Luthuli house and was supposed to be here on Monday and I understand amongst other things they were concerned that perhaps he was not circumspect enough in looking at this. We will know, I’m sure as the policy conference progresses.
Thanks very much. Martin Creamer is publishing editor of Engineering News and Mining Weekly.