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Government’s effectiveness in stabilising mining sector questioned

19th June 2013

By: Chanel de Bruyn
Creamer Media Senior Deputy Editor Online


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JOHANNESBURG ( – Government has failed to play an effective facilitative role and to create a predictable and stable environment in the local mining industry, Webber Wentzel partner and head of Africa mining and energy projects Peter Leon said during a roundtable discussion on the mining industry, broadcast on Talk Radio 702 and hosted by Redi Thlabi, on Wednesday.

In response to a question on what government’s role should be in the mining industry, he said a failure to deal with these concerns could lead to another Marikana.


Exxaro CEO Sipho Nkosi commented that there was no doubt that South Africa was not in a good space in terms of its relationships with shareholders at present.

He pointed out that there was a perception that government was not doing enough to stabilise the mining sector and that the application of laws was inconsistent.


Nkosi said government was responsible for providing clarity in terms of where the industry was headed and to ensure that all role-players adhered to the relevant legislation and laws.

He stressed that if investors perceived South Africa to be a lawless State, the industry would not be able to attract further investment.

However, he was encouraged by the fact that representatives of mining companies and labour unions had come together last Friday in a meeting chaired by Deputy President Kgalema Motlanthe to work on resolving the issues facing the sector.

At the meeting, government, business and labour agreed to ratify a draft document on ensuring sustainable mining in South Africa.

The parties also committed to continue to meet quarterly over the next 12 months to ensure common action to deal with any issues that may arise.

Meanwhile, asked for comment on whether the negotiations surrounding job cuts by Anglo American Platinum (Amplats) earlier this year had been handled correctly, Leon said this could have been better.

He stated that the comments made by some government officials about Amplats’ plans had been unhelpful.

He noted that, while mining companies did have a broader responsibility, their primary responsibility was owed to shareholders.

He pointed out that investors were questioning if local mining companies could, should the economic environment dictate, cut jobs. He added that mining companies were presently facing high labour and administered costs, as well as lower commodity prices, and that “something has to give”.

National Union of Mineworkers general-secretary Frans Baleni disagreed that government’s intervention in the Amplats negotiations was wrong, saying that, if not for government having challenged the job cuts, many more employees would have lost their jobs.

Association of Mineworkers and Construction Union national treasurer Jimmy Gama added that government should also intervene at other mines where major job cuts are expected, such as Coal of Africa’s Mooiplaats colliery, which had been placed on care and maintenance.

He believed that mining companies were taking shortcuts in cutting jobs without proper consultation.

Chamber of Mines VP Khanyisile Kweyama commented that there had to be room for businesses to restructure should the economic environment be such that businesses could potentially shut down completely; however, she urged businesses to be conscious of their social licence to operate and the impact that such job losses have on workers, their families and communities.

Meanwhile, Baleni, Gama and Nkosi felt that mining companies could afford to pay their workers higher wages.

In response to comments from the audience citing the successful pay rises seen in the Australian resources sector, Nkosi pointed out that productivity in Australia was high, which was not the case in South Africa.

He added that many functions in the Australian resources sector had been mechanised. This would lead to greater job losses if implemented in South Africa.

Further, he highlighted that Australia was a developed economy.

Baleni and Gama conceded that there were productivity challenges in the local mining sector, stating that the labour unions were committed to working with mining companies to improve the levels of productivity.

Gama stressed, however, that the productivity challenges were often not the result of workers’ lack of effort, but that other factors, such as broken equipment and geographical challenges, also contributed to this problem.


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