Instead of facilitating investment in a risky industry they, the ANC, did everything in their power to chase potential investors as far away from these as possible. I have in the past years quoted the Fraser Institute Ratings year after year to the mirth of many.

Despite my rants and the warning signals given by departing mining investors, the ANC continued with the policies aimed at driving skills away, make mining difficult with over regulation, making labour unaffordable and making sure that ownership remained under threat with BEE policies and government sponsored piracy.

Today, none other than Pravin Gordhan stood up and admitted, by implication that the ANC government cocked it up. He admitted that we missed the resource bus and he warned that we may do so again. He assured us that Susan Shabangu was putting systems and action plans together to try and remedy the mess created by the ANC.

Having said that, Gordhan must realise that it will take more than nice words and apologies and excuses for him, or anybody else in government, to right this ship. The investor community will not forget all the other promises made and not kept by the ANC in general and the Zuma government in particular. They will not blindly believe the ANC whilst the Malema and his followers are sounding more and more like Mugabe every new day. They will watch and wait until they see the differences; until they see clear signs that Zuma and his band of pirates have changed their ways.

Over the past five years, South Africa has fallen precipitously from 37 in the rankings and in many subsets of the survey South ranks very close to countries like Zimbabawe.

 “South Africa remains a good investment destination”, says the Department of Mineral Resources (DMR), disagreeing with 494actual mining investors polled in the survey. The DMR will nevertheless be taking this message on an international road show slated for early March in Canada and United States”.

I wonder which part of the report the ANC, Shabangu and the Department fail to understand. Maybe they just do not understand the business they are trying to regulate and govern.

It costs R 2 billion to start a medium sized mine and it takes 10 years or longer before that investment shows any returns and then the returns are limited to 20 years; a risky business indeed. Wiil you put 50% of your pension money into such a venture? Will you put a cent of your retirement money into such a venture if you were to retire in ten years time?

If South Africa is going to create 8 or 9 mines a year, required to create 140000 jobs in Zuma’s plan, in the next ten years, we are going to need these investors. The industry cannot be sustained or create jobs by taking the mineral rights of operating mines like Sishen and handing it to someone else in South Africa without any fixed  investment taking place.

Examining the results of the Fraser survey it is clear investors are steering clear of the South African mining industry for a number of very valid reasons. The uncertainty caused by the regulatory environment mitigates against the high risk posed by South African mining. The high cost of labour, restrictions on the employment of skills because of affirmative action, the general shortage of critical skills and the cost of strikes erodes returns and creates a business environment where high risk and low return is the norm. Add to that the possibility that your “property” are threatened with nationalisation, appropriation by connected individuals and with Mugabe style invasions a distinct possibility, the apathy of investors are understandable; in fact as a shareholder I would praise their caution.

The truth of the matter is that the biggest mining companies in the world avoid investment in the South African mining industry, not because they are ill informed, on the contrary, it is companies like BHP Billiton, Rio Tinto, Anglo American and Goldfield, most of them with strong South African ties and roots, who are reducing their exposure to South Africa.   

What is significant is that the mighty BHP Billiton ignored South Africa in their $50 billion expansion plan. It is significant that DeBeers are selling their South African properties and are investing millions of dollars in the Snap Lake Mine, a hell hole, in the icy Northern territories of Canada. It is significant that Goldfields prefer to invest in a mine in Finland, a place where people are notoriously expensive, rather than in a relatively easy, cheap and simple Uranium operation in South Africa. It is significant when Xstrata prefers to invest in an Iron ore mine in Mauritania rather than acquiring South Africa’s Lonmin, the third biggest platinum producer in the world.

 It is even more significant when, despite calls for increased mineral beneficiation, the leading producer of ferrochrome in the world, halts the expansion of ferrochrome capacity and reverts to ore exports to China. It is a tragedy when the biggest BEE mining company in South Africa whose connections with the top office of the country are legendary, prefers to export chrome ore rather than expand their benificiation capacity because, whilst the returns from ore exports are smaller it ameliorates the risk of the investment in smelters.

Shabangu and her cronies think the investors are stupid. You do not have to be a rocket scientist to see the folly of investing in South Africa.

It is interesting to note that Zimbabwe have the potential to create a second Rustenburg; they can produce as much platinum as are produced in the Rustenburg area yet it remained largely untouched for two for the same reasons why people are avoiding South Africa. This situation will be exacerbated every another, more restrictive labour law is passed, or another property hijacked, or another call for nationalisation is made, even when Mugabe calls for the attachment of foreign mines because we, in the eyes of the investors are now not much different to Mugabe.

If the Zuma government is to turn the tide they will have to start dancing to a different tune; Umshini Wham is just not cutting the ice.

Conducting negotiations over mineral rights is not anymore conducted in boardrooms between the prospective partners. Holders of Mineral Rights, wanting to discuss commercial terms must be prepared to do it in dusty township stadiums with the Guptas, a Zuma family member (Duduzane), Lazarus Zim accompanied by heavily armed police, bodyguards and a senior official of the Department of Mineral Resources.  The heat the holder of such a Mineral Right feels during such negotiations has very little to do with the ferocity of the sun…the heat they feel will be present even on a cold and cloudy day.

The DMR do not take steps when Zuma mines pollute our water resources. Aurora, a mine belonging to a Zuma and a Mandela, has been pumping poisonous acid water into our water resources for over a year with the knowledge of the department and they will continue to do so but in future it will be paid for by the citizen.

Employees are shot and killed at Aurora mines and the DMR turns a blind eye. A woman was killed in a mine accident in December 2009, something that will cause a 48 hour or longer stoppage on any other mine with permission to continue normally only given after an in loco inspection. The mine in question was given permission to continue operations without as much as an in loco inspection by an Inspector of Mines.

Employees of Aurora cannot be legally employed by other mines since they do not have medical exit certificates from their previous employer, Aurora, a legal requirement for reemployment. The DMR tells prospective employers to employ these people with a note on their medical files (circumventing the law) yet the DMR won’t issue this instruction/permission in writing. Should the decision of an employer to employ a person based on this flimsy exemption backfires on the prospective employer,  the DMR will wash its hands and the errant employer will become liable under the law for helping the Zuma rejects.

The DMR are openly promoting the interests of Zuma and his Gupta partners, presenting them, Indians arriving in SA in the 1993, as suitable BEE entities certain to smooth the path to the acquisition of prospecting permits and Mining rights. Government sponsored fronting, or perhaps a Zuma fronting for the Guptas? Ironically Shabangu is the minister who, less than a year ago, took white mine bosses to task accusing them of fronting.

The bias of the DMR has been clearly illustrated in the Sishen affair, where not only Anglo American was short shifted, but also a BEE company connected to Baleke Mbete and Tokyo Sexwale.

For my views I was often ridiculed and laughed at but these days, more and more “reputable” and “valued” analysts and commentators advocate the same views in conferences and publications that I have espoused for a while now. Despite this there are still many who refuse to believe.

It is interesting to note that BHP Billiton, the second biggest company by market capitalisation in the world, lagging behind only Exxon Mobile, are sitting on a pile of cash they do not know what to do with. The South African CEO of BHP Billiton, Marius Klopper, a “boertjie” not intimidated by the “Kill the Boer” song, announced that this gigantic company who dictates terms even to the likes of the mighty China, will embark on a five year, USD 80 billion plan, to expand the resource behemoth. To put this into perspective; $ 80 billion are more than the market capitalisation of Anglo American, the fourth biggest resource company in the world. The sad but not unexpected part of the story is that not a penny of the $80 billion, are destined for South Africa where the ANC government promised 140 000 new jobs in the mining sector (an equivalent of ten mines a year at a cost of $ 1 billion each) over the next eight years.

Unfortunately BHP Billiton is not the only resource company taking a dim view on investments in South Africa. World no 2, Rio Tinto, and numberone gold miner, Barrick are avoiding the country like the plague. And whereas Goldfields previously stated that they were reviewing their exposure to their South African assets, their CEO, Nick Holland has now made it very clear that Goldfields will focus on stabilising (accountant speak for sweating the assets or running the asset into the grouns) their gold output from South Africa by milking their main asset, South Deep, a mechanised operation which will not absorb the jobs lost as a result of winding down their other operations, Kloof, Driefontein and Beatrix. Holland also announced that the envisaged Uranium mine, based on the retreatment of uranium bearing gold mine tailings, will not go ahead. Instead Goldfields, having slipped from being the world’s second or third biggest gold producer less than two decades ago, to number six or seven currently, will develop prospects in Mali, Peru, Philippines and of all places, Finland. Astonishingly Goldfields have found it is cheaper to mine gold in a very developed and expensive, over exploited, Scandinavian country than in South Africa with its vast amounts of known resources.

The strategy of Goldfields to stabilise sweat their existing assets to the maximum extends further. It is an open secret for those with the necessary insight that Anglo American is following a similar strategy. They have in past years, flogged their most valuable assets, locked up in Anglo Platinum, to partners in joint ventures and, in doing so, substantially reduced their risk and exposure to the pernickety politicians belonging to the broad church. In their established operations they have minimised their capital expenditure to the barest minimum. They, Anglo, avoided the capital expenditure that would’ve been required to establish the Stylsdrift Mine and when they could no longer avoid or delay spending and in so doing they reduced their risk by passing the property on to Royal Bafokeng Holdings. The existing operations of Anglo Platinum requires a major Vertical Shaft system in their Rustenburg operations – virtually a new mine at a cost upwards of a billion dollars US – to maintain output. Anglo Platinum instead deferred this capital expenditure, choosing to access the cheaper ore requiring very little capital outlay at their opencast mine near Potgieterust; this in a market that is currently undersupplied; a clear indication that any growth plans requiring large fixed investment will be avoided or deferred until such time as sufficient security returns and risk is reduced to acceptable levels.

Despite this, the ANC continues to promise thousands jobs in mining with the disingenuous Ibrahim Patel telling the ill-informed and the great unwashed, that the last year saw the creation of 17000 jobs in the mining industry, perhaps Patel and his friends in the broad church are thinking of jobs along the lines of those at the infamous Aurora Mines of the Zuma – Mandela family where workers haven’t been paid for more than a year. Patel conveniently omitted to mention that jobs in mining shrunk from 500 000 in 2007, to 346 000 in 2008, 296 000 in 2009 and to 303 000 in 2010; a net loss of 200 000 in three years. “The global economic crisis”, many will point out to which the answer; “Wake up, resource prices and demand are back at pre-crisis levels and the resource producing countries, except South Africa naturally, are coining it. We are too busy destroying a good thing.”

Those easily fooled by the $1.5 billion investment in the dying cow; rest assured $1.5billion is a drop in the BHP Billiton ocean, you will be interested to learn that even Susan Shabangu has seen through the plan and warned the likes of BHP Billiton not too rape resources in their hast to depart these shores.

In the interest of completeness it may serve us well to take note that 4 years ago BHP saw the writing on the wall and flogged the best, or ,at the worst, the second biggest Chrome and Ferrochrome company in the world, South Africa’s Samancor. They followed that with the sale of all their Diamond interests in South Africa and then during the global crisis they moved South African Aluminium capacity to Brazil.

Unfortunately BHP is not the only one who decided that running is the best thing to do, Rio Tinto has done the same and so has Anglo, they are just not saying it in so many words.

The decision to sell Finsch Mine was an easy one. De Beers, years ago decided to get out of the country. Mining, because of labour (COSATU) and government (ANC) became too expensive and the margins to thin. The risks of tenure and other regulatory uncertainties curtailed exploration and the decision was made to sweat the assets and get out leading to the mass sell-off of mines. The Kimberley mines were the first to go with the BEE-company taking them over, KCM – loosely connected to the Zuma clan – recently suspended from the JSE. The Cullinan mine was taken over by Petra and are barely surviving – albeit at a much smaller scale with considerably fewer people than before – thanks to the find of a typically massive and “lucky” gem; luck that cannot continue for much longer.

Finch Mine does not have the luxury of huge and lucky gems. The mine depends on the mass production of cheap industrial diamonds and small low value gems. Petra no doubt will reduce the size of the mine and scavenge dumps and easily accessible ore of which there is little left. Going deeper will require huge investment, investment DeBeers baulked at for good reasons.

The sad thing is that in 2005/6 Finsch Diamond Mine became one of the most technologically advanced hard rock underground mines in the world; a true pioneer. The technology employed at Finsch was critical in ensuring the viability of sustainable continuing operations.

Because of the South African skills shortage it became increasingly difficult to support the advanced mining technology at Finsch mine and future investments in this technology became just too risky given the deviancy of the Department of Minerals. In the end the selling price of Finsch Mine of $200 million hardly equates to the cost of the Mine Automation Project.

Sadly many of the excellent engineers developed in this process have left South Africa. They work abroad for DeBeers and for the companies involved with DeBeers in the development of the technology.

With Finsch gone, Venetia Mine remains the last Bastion of the erstwhile DeBeers South African Empire, in South Africa – an empire destroyed by transformation. The mine will be retained by DeBeers until the easy resources are exhausted, the assets have been sweated properly upon which it will be flung aside to be used by unscrupulous BEE companies, like KCM, to fleece unsuspecting investors.

Resources are not inexhaustible and for that they must be recovered effectively and investments must be made in finding new resources. In South Africa this cannot be done because of inflated labour costs, ineffective training and education, a government threatening ownership, a ruling party prepared to steal mineral rights for the benefit of a select few in the top party echelons.

Despite my contention that the people making the rules are destroying our future; despite references to outside agents and empirical proof of the decline many ridiculed my position and branded me an Afro-pessimist and arch racist. I have expressed my view on this blog dedicated to mining issues, in articles published at MyNews24, the Business Day.

Yesterday, a business leader who I respect and who many will agree is probably one of the most respected leaders in our country, certainly more respected than the likes of Jacob Zuma, Mamphela Rhampele, expressed the same sentiments as this Afro-pessimist and arch racist have done at numerous occasions.

I will not quote Rhampele verbatum, her article in the Sunday Times is there for all to read, just follow the link

To reinforce the feeling so expressed, Goldfields announced that, as a result of the uncompetitive nature of the sickly mining industry in South Africa, they will be cutting 6000 jobs in the next few months, all in their South African operations. This hot on the heels of Harmony’s announcement that they will be closing down parts of their South African operations. A nice kick start to the ANC’s lofty ideals and solemn promises to create a million jobs a year for the next seven years.

But yes; it is not nice to say I told you so, but what the heck; here goes “I told you so!”

For too long the three sectors that create most jobs, the mines, the farms and domestic employment have been vilified and used as a playball by politicians and stick to beat people with. As long as this continues we will not see the creation of jobs and we will not have an inflow of capital. South Africa will remain a market for speculators; a place to park your money when the going is bad elsewhere or when you await opportunities elsewhere in Africa.

The sooner the South Africans realise that the road to growth is through hard work and being competitive, the sooner we will experience growth in wealth and jobs. The sooner people realise that growth and exports are not dependant on exchange rate games the better. Exchange rate manipulation will bring short term results but only hard work and innovation will make us competitive and bring sustained and sustainable growth.

Ah…work you say! But that is a strange concept and wishful thinking to boot. Who, in his right mind, will vote for a politician who says you have to work hard and pay for the things you want. A foreign concept indeed. Besides, did our favourite part-time Commie and Minister Of Higher Stupidity, the bluntest of Blades, not tell us that a person, to sustain himself, should be able to do so with three hours of labour a day. The teachers affiliated to SADTU certainly took him to his word and so did many others. The problem is just that they are making babies at a staggering rate; a growth rate the government would like to see for the GDP. Who; I wonder, does Blade expect to work the three hours required to sustain each of those outcomes of the famous South African breeding colony?

 Logically, a country having the best and largest chrome ore resource in the world, the ability to generate electricity, plenty full iron ore and steel, knowledge and skills and millions of unemployed people, should be the prime producer and supplier of the bulk of the world’s stainless steel – requirements – an essential building block for the rampant growing economies of the world; the so called BRIC companies the ANC government is so infatuated with. Instead, like other mineral resources, South Africa’s output of stainless steel and ferrochrome has stagnated with the only area of growth being the export of raw, low value chrome ore to China who, being more competitive, negates the excessive shipping cost, produces ferrochrome and stainless steel. The country that should be producing the stainless steel ends up an importer of its beneficiated chrome ore and ferrochrome. The jobs needed by South Africans having gone to China, entrenching the negative trade balance existing between the countries.

 The reasons for this sad state of affairs are seated in the difference in approach between South Africa on the one hand and China and India on the other hand. In South Africa, government policy – or rather the lack of clear policy; the threat to tenure by government and the ANC; the power of labour, supported by the Industrial Relations Act and the consequent uncompetitive cost of relatively lowly skilled employees and the migration of professional and management skills, due to affirmative action and the general over- or perhaps misdirected- regulation of mining, are choking the mining industry to a slow death. In China and India labour cost is governed by the market and trade unions have limited power. Education levels are high and there are incentives to enter into mining ventures whilst technological development is a priority.

 In his address to the Mining for Change Conference, Joel Netshitenze, ANC strategist and member of the National Planning commission inferred that, after sixteen years in power, the ANC government has no Strategic National Plan for Mining and was still in the process of formulating a beneficiation policy. It is no wonder then that the advancement of chrome beneficiation has come to a grinding halt, with investors – not sure of anything connected with South Africa any longer – fleeing, having decided the SA mining industry is a place to be avoided.

With the recent cases of mineral rights being hi-jacked by politically connected people and the rumours of turmoil in the Department of Mineral Resources weighing heavy on their collective minds, investors and mine owners attending the aforementioned conference have to listen to the ANCYL president calling them thieves and robbers, promising to nationalise mines, disowning them in the process, whilst the Minister (Susan Shabangu) who, very dramatically, promised that nationalisation will never happen only over her dead body, are nowhere to be seen, having passed up her spot at the conference to a lesser person, no doubt.

 It is ironic that the industry that are able to create more jobs than most in a relatively short time is effectively murdered by the misguided ANC government. Misguided policies and ideology has left a once great and thriving industry struggling for survival.

The raiding of resources by connected politicians in the name of transformation has destroyed jobs and left most of the followers of the ANC poorer and disillusioned. The disappointment and disillusionment has created the environment for the Nationalisation Campaign of Julius Malema and the ANCYL.

 Members of the ANC are aware of the ease with which their leaders, without lifting a finger, become filthy rich by taking over title to the magnificent resources of this country – a fact clearly proven by Imperial Crown Trading who, by making a few photo copies and filing in some forms made R 900 million in the matter of six months. To these members the suggestions of their young hero makes sense. His promises, in their minds create opportunities not to be missed. The acceptance given to Malema, by parliamentarians, when he presented his ideas a few months ago, bears witness of the popularity of his ideas. Be warned.

Rio Tinto does not stand alone. In the past week Xstrata announced a huge expansion project in Mauritania. A company holding some of the best ferrochrome assets in the world right here in South Africa find Mauritania less risky than South Africa? Surely something is wrong?  

The Xstrata decision is better understood when we read that Mark Bristow, South African CEO of Randgold Resources, prefers to invest in a DRC project rather than a South African project. If that is not enough, Harmony Gold announced that a project to sink a new shaft has been canned. 

Why this nonsensical decisions? I’ll tell you why;

In SA your mineral rights could be stolen by the family and close connections of the President – Sishen, ICT (Zuma, Gupta) 

In SA the labour is expensive and uncompetitive, their laziness being insttutionalised by government and legislation 

In SA management are vilified and threatened.

In SA, what is not stolen by the connected has to handed over to connected politicians in BEE deals 

In SA there are no skills, the skilled manager’s work abroad for the big mining houses 

It is because of this that we have fly-by-nights such as Khulubuse Zuma and Kodwa Mandela starting up companies like Aurora Mining; companies designed to destroy value whilst filling the pockets of their principals with money from “investors” with dark agendas. 

It is no wonder then that people with “Ubuntu integrity” like Lazarus Zim – Chairman of Kumba and closely connected with the crowd who effectively stole the Sishen Mineral Rights from Kumba - the failed Tokyo Sexwale and Mzi Khumalo replaced people like Marius Kloppers (BHP), Mick Davis (Xstrata) and Jan Du Plessis (Rio Tinto) as the great South African Magnates. In the modern and transforming South African, mining magnate is understood to be someone like the crooked swindler and ANC darling, Brett Kebble. How much further shall we fall.

No wonder then that whilst the rest of Africa has to fight of Chinese investors, eager to get their grubby little hands on their mineral resources, Jacob Zuma has to make speeches in Beijing in a tone of voice one would normally associate with that coming from a beggar, urging the Chinese to invest in our resources. 

Perhaps Zuma will still learn that mining requires huge investment and investors, no matter how rich, will not invest in business that could be stolen or driven into bankruptcy by a workforce that does not know the meaning of the term, work ethic

In this intriguing tale of robbery and deceit a whole chunk of iron ore reserves were stolen from an unsuspecting Kumba iron ore by master of deceit Jagdish Parekh – agent of the Gupta brothers, big friends of; you guessed it; Jacob Zuma and partners. Parekh and his cohorts in Imperial Crown Trading – Kgalema Mothlanthe, Duduzane Zuma and others – invariably with the help of loyal cadres in the Department Minerals – illicitly used stolen Kumba documents to apply for the mineral rights which was conveniently allowed to lapse by another company run by modern day moguls; Accelor Mital. The chairman of the company – victim of the scam; Kumba Iron – was none other than Lazarus Zim, co-owner; with the Guptas; of a company called Afripalm.

For those not grasping it all yet; besides the shenanigans of the politicians and their appendices – Mothlanthe, Zuma and others – which is anyway expected and par for the course, we have a situation where the honourable Mr. Zim seems to be closely connected to the band of raiders – RCT and stand to gain handsomely from this latest scheme to enrich and reward the select few with the spoils of the struggle. Whilst Zim plots with the raiders, he remains the chairman – receiving a handsome fee for his efforts – of the company, KUMBA Iron, which will be irreparably harmed by the actions of its chairman and friends. Now, unless I’m mistaken, to be the chairperson of a public company requires a high level of integrity and the chairperson of such companies are expected to have the best interest of the company at heart.

This case presents a clear conflict of interest and to call Zim a man of integrity would be stretching the truth. Instead of taking the honourable route and resign as chairman, Zim, after being pushed, agreed to recuse himself from KUMBA board discussions involving the ICT issue – a very convenient arrangement. He can use that time and over a cup of coffee, can discuss ICT strategy with the Guptas, young Zuma and Parekh.

My gripe today however is not with Zim; after all his actions are not extraordinary. Truth be told, I would’ve been extremely surprised; even shocked had he acted in a different manner. My gripe is with the board of Kumba who, petrified of being called racist or anti-transformation, accept the untenable situation; the only sign of resistance; an odd cowardly remark dropped in passing by board members hoping to placate their nagging consciences.

Board members fearing the racist label are the same people running around claiming, after the fact, their innocence and rabid opposition to apartheid. Today these captains of industry are as silent as their predecessors in the apartheid years; a silence then, that only broke when they saw the writing on the wall. Once again these brave men of integrity are carefully watching for the writing to appear; the sign for them to allow their integrity to once again burst into the open.

My message to these captains of industry; moral pillars of big business; stock up on bully beef and candles, fill up the water cans; there is a long wait ahead – I hope you will find your integrity and values at the end of your vigil.