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Jul 13, 2012

Vital conversation

Gold|Johannesburg|London|Mangaung|Melbourne|Africa|AngloGold Ashanti|Mining|Resources|Safety|Africa|South Africa|Positive Spin-off|Mark Cutifani
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The importance of the mining industry to South Africa’s economic expansion cannot be disputed. There are also few who would discount the assessment that the country still houses a resources treasure trove worth trillions if it were to be extracted, processed and sold.

There is less consensus, however, on whether mining has been a true engine of social development. There is even less agreement on whether it has helped or hindered the process of social cohesion. Many would argue, for instance, that the mining sector never truly valued the lives of black South Africans, as evidenced by its dismal safety record. Others would also highlight the fact that the wealth generated from the country’s natural endowments has never been adequately shared.

Divergent opinions on the role of mining in the South African economy have come to the fore primarily as a response to efforts aimed at dealing with what was quite a forceful call for mine nationalisation – a policy proposal at the centre of the African National Congress (ANC) Youth League’s demand for ‘economic freedom in our lifetime’.

To some extent, the abrasive tone adopted by the youth body has already exacted a toll on the industry, where production growth and investment rates were already lacklustre when compared with other resource-rich economies.

The evidence is mostly anecdotal, but it appears that the national-isation rhetoric has cast a pall over boardrooms, and not only in the mining sector.

It did not help that the domestic industry was unable to provide an immediate counterweight, owing partly to the fact that its current leadership lacks the gravitas of previous generations – a reality that probably has a lot to do with the fact that the centre of the South African mining leadership universe is no longer Johannesburg, but rather London and Melbourne.

One positive spin-off from the nationalisation rhetoric, though, is that it has served to highlight the importance of mining and shine a spotlight on its potential as an agent for growth, development and job creation. In other words, it has also created an opportunity for a vital conversation about the role of mining in the economy and in supporting the aspirations of a national democratic society.

Somewhat ironically, it was a non-South African, AngloGold Ashanti CEO Mark Cutifani, who was able to grasp the fact that it was as much an opportunity as a threat. Doubly ironic – given that gold is unlikely to attract the much-feared ‘strategic’ mineral label (a title that has price-control connotations), owing to a view within the ANC that the gold sector is in secular decline.

The level of the potential conversation has also been raised by the ANC-commissioned ‘State Intervention in the Minerals Sector’ document, which not only interrogates mining regimes in a number of countries but also teases out some of the key contri- butions that mining could make to dealing with the problems of unemployment, poverty and inequality.

It is now up to the mining industry to engage, so that those truly concerned with effective, rather than merely rhetorical, policy will be able to sharpen their arguments ahead of the big gathering in Mangaung this December.

Edited by: Terence Creamer
Creamer Media Editor
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