Open Letter to Gwede Mantashe

May 27, 2009

Open Letter To Gwede Mantashe

 

                                                                                                                                                                                                                                                                                                            January 9, 2009                         

The General Secretary

The African National Congress

Dear Comrade Mantashe,

 

State Owned Mining Company.

 

With the general election behind us and the resounding success of the ANC and its alliance partners your mind must be occupied by the planning and strategising around your ideas for the state mining company that has been a dream of yours for many years. I believe you are the best person to drive and manage such a company given your vast experience of the mining industry, and your understanding of the industry, warts and all, can only lead to success. However with some of the issues needing cleaning up, like sorting out the wayward lot in the Western Cape, Sbu’s car, taxi drivers and the Rapid Bus Transport System, Telkom and that pesky Barney Pityana fellow. I’m sure you find the inability, to give your noble vision for a State Owned Mining Company its deserved attention, very frustrating.

To add insult to injury, Ibrahim Patel, typical of the Western Cape types, goes and steals a march on you and bails out Seardel and their fat, lazy sewing machine operators. I always believed you couldn’t trust anybody from the Western Cape in an economically critical cabinet portfolio. They are just too laid back and plain lazy.

The time has come for you to appoint someone who shares your passion and vision. Someone with similar vision, enthusiasm and commitment. Someone who can take your vision forward now that you have a mandate from your constituency. Now is the time to get the project up and running whilst the capitalist factions within the ANC are still stunned and distracted. If you wait too long they may get organised and drum up enough support to scupper your plans. I believe, without being presumptuous, that I could be the ideal person to make your dreams a reality.

I have the background, education skills, experience and personality that make me the ideal candidate to get the project of the ground. As a young boy, my grandfather taught me how to use a bullwhip on the lazy farm workers, an experience that stood me in good stead later in life. I completed my school education in 1971 after which I enrolled at University. There I dabbled in politics and told everyone I was a communist whilst extolling the virtues of my great hero, Fidel Castro, thus gaining my struggle credentials. After being kicked out of University, I joined the civil service, where I worked for the CSIR in telecommunication research, which helped me to understand our co-operation with the USA on space and telecommunication projects. During my tenure there, I learned a lot about spies and the intelligence community by listening very carefully and studying many textbooks by Ian Fleming, Ken Follet, Tom Clancy and other intelligence and counter intelligence experts. Because of my vast body of knowledge and experience, I, unlike lightweights such as Vusi Pikoli, understand issues critical to state security and I am probably the best-qualified person in South Africa, after President Zuma and Moe Shaik of course, in this critical area. I mention this because I know; both you and the President are trying to deploy as many as possible intelligence operatives from the struggle era into the new government. Very clever, we will not have Xenophobic attacks again only to hear from the likes of Kasrils that NIS knew nothing about it. In this time I did military service, unlike Carl Niehaus I did not take the easy way out…I went up there to learn and hone my skills as a leader and a ruthless soldier. I made it to sergeant, however, my military carreer was cut short by my desire to commit to a fulltime mining career.

Adding word to deed, I joined the mines where I showed my leadership qualities and rose through the ranks to a leadership position in the UOASA (now UASA). You may think that leaders in UOASA had it easy compared to leaders of NUM. Do not believe that, they were a bunch of ninnies walking around with matches, tyres, petrol and machetes, no offense intended. We did not have those luxuries, to swell membership and deal with management, we had only our leadership skills and charm to rely on. However, as some of our comrades say, we did not join the struggle to remain poor and stupid, so I decided to further my mining career and resumed my studies.

I obtained a mining and business qualification and quickly rose through the ranks to a senior management position. During that time, I learned how to deal effectively with Unions, DME inspectors and the many technical and social challenges facing the industry. I learned how to sidestep, beg and, as is the want of our President, promise anything under the sun. Most important, I learned how to spot lazy loafers a mile away. I have also added considerably to my vast knowledge by using my idle time to learn about the GULAG, having watched Michael Palin’s excellent programme showing how effectively Stalin dealt with workers in the uranium mines in Siberia, I became an expert in this field of study. I have I have submitted my degree request to the University of Novokutsnesk and I my degree will be awarded soon.

I also learned a lot about you as a leader, the way you led NUM, SACP and ANC, your immense ability to apply the principle of “divide and rule”. Examples of your cunning resolve are legion, getting Archie out of NUM, manipulating the entire ANC and inserting your carefully selected team to lead the next phase of the economic emancipation of the country and its people. The cunning way in which you by, sowing confusion in the ranks, kept everyone focused  on your objectives, all the time thinking they were doing it for themselves.

Having given your plans and vision considerable thought, I came up with some excellent plans that will make this venture a great success. Obviously, we need a resource. I suggest we nationalise Pamodzi and Anglo Ashanti’s South African gold mines. I won’t be surprised, in fact I almost sure, you manipulated Cynthia Carroll into selling Anglo Ashanti. I mean, we now have a good reason to nationalise the resource, not wanting it in foreign, especially American, hands. As for Pamodzi, we know nobody really wants it. I do however believe, by applying my labour model, we can turn it into major success.

The second most important issue is the Human Resource requirement, people and skills. We know that we lack technical and management skills and given the spectacular failure of Gipsa, which we know was your initiative sabotaged by the Mbeki lot, we are nowhere nearer a solution. We can however steal a march on the rest by using Sonjika and Zokwane’s idea of arresting mine managers when they have fatalities on their mines. We can then deploy them to the State Mines as punishment, a bit like the GULAG. Some of the other technical skills we require can be had in China. With your special relationships, we can easily facilitate that. I thought about your idea of using African skills but in my experience, they are not very good and besides, they will probably be killed by our Xenophobes. The good thing about employing Chinese is that they can work long hours and even stay underground between shifts. They are used to dying in the mine, in China they die by their thousands and you never hear a word of complaint. The performance of Chinese workers in South African mines, in the early days, is legendary.

As for the semi-skilled labourers needed, it should be easy to convince the Unions that the State Mine is theirs as much as the government’s. Using that argument, and a change here and there to the labour laws, we can exempt the State Mines from the restrictive clauses of the LRA . We should be able to employ the unemployed at the same wage we pay Zimbabwean illegals. Another source of semi-skilled labour is cable thieves and illegal miners underground. They are actually ideal for the purpose. Their modus operandi of living underground for long periods, when stealing copper cable and gold, makes them ideally suited for the job at hand. We only have to bring them to surface once in a month to avoid destruction of pigmentation. I have many more ideas but I do not want to bore you now, we can discuss those when we meet to discuss my employment terms.

  Your Partner in Struggle

  Comrade George Annandale


Mudblasts

May 27, 2009

* According to Mike Cutifani, CEO of AngloGold Ashanti, South Africa experienced  an unexpected fatality stoppage, a brief strike by drillers, a slow resumption of operations after the Christmas break and some technical difficulties — nothing particularly surprising or to be worried about. South African operations will be affected by the usual swathe of public holidays over the Easter period

Maybe that is exactly the problem. Everything normal and nothing to be worried about. Why don’t you just shut it down? If the government and the workers do not care, why should management and the investor care?

 

* Cutifani also stated that no greenfields exploration is being undertaken in South Africa and the country’s mature gold mining industry continues its steady decline.

Mine killer, job destroyer. I wonder what the Vodafools think about this lot. Selling the “crown jewels” to foreigners. I do not think they need to worry too much. The South African operations will be given back to South Africans through some BEE deal that will leave everyone poorer. The Minister probably thinks it has something to do with Cynthia Carol’s goodwill.

 

* Nick Holland , CEO of Goldfields, stated recently that Kloof reduced fatalities by withdrawing from remnants

Another one? Is he telling us the strategy is to withdraw until nobody is left underground? Surely, he does not believe that, not in this land of opportunity. Imagine, No work, no workers and no risk. It sound like a pretty good growth strategy and it should make the government and unions happy

 

* According to Holland, the future of Goldfields’ SA operations relies heavily on South Deep and the adjacent Kloof reserves.

This is becoming hard to swallow. Maybe South Deep is one of those visionary dreams, high on promise and low on delivery. By the time they have figured how to turn the rich promises to account, pigs would have learned to fly. Mind you, with the Mvhela stake in Goldfields and with Tokyo’s self-confessed connections with the witchdoctor fraternity, nothing is impossible. A bit of mumbo-jumbo and hey, flying pigs everywhere

 

* Harmony CEO Graham Briggs said, “We have positioned the company in such a way that we are able to deliver on our promise of paying a dividend in future. Our focus now remains on achieving our overall targets and delivering consistent returns,” he said. This after the March share placement, which followed on from an earlier share placement in December through which Harmony raised R979m.

You know a miner is in trouble when he says as little as possible about his operational performance whilst waxing lyrically about his ability to mine the stock market and then in a spell bounding display dazzles his audience with elaborate plans for the future.

 

*  It is termed a civil war but the squabble for control of Diamond Mining Giant, Rockwell Diamonds is nothing more than a childish scuffle between two parties with different opinions on how best to mine the Securities Exchange, with no concern for the small investor

At the end of the day, Rockwell Diamonds, under present market conditions, are probably worth as much as the glowing PowerPoint presentations of its magnificent prospects. The mammoth battle between the famous, some claiming to be famous, some inconsequential and the odd reject claiming fame, is rather absurd. As the combatants (Bristow, Bristow and Copeland  on one side and  Von Weilligh, Reynolds and Van Wyk on the other side) square up for the fight that will destroy what little value remains in the company, spare a thought for the employees and the small investor.

 

* Senzeni Zokwana, President of NUM said; “This marginalisation of women in general and black women in particular not only impacted negatively on the role of women in economic activity but further entrenched their exclusion in the different sectors of our economic landscape .This marginalisation inculcated cultural and gender stereotypes which victimised women particularly in the mining sector .In this regard entrenching the hegemony of male chauvinism in all layers of employment in the mining industry.

Now, many years on, and having had woman minister after woman minister of mines, one ending up as deputy president, and a woman CEO at the helm of Anglo, the mining industry are still miles of the target. Maybe the appointment of a new minister of mines and a minister to look after woman rights will bring fresh ideas. Maybe the Gauteng Premier inadvertently pointed the way forward when she pleaded for open minds on the decriminalisation of prostitution.

This triggered my imaginative mind and I thought of the great Senzeni Zokwana’s wise words; “black men believed also that women must remain in the rural areas or in townships while they dived and descended further into the curse of production in the dark bowels of the earth which have never been hospitable even to the male folk”. Now, if that is a not plea by leaders to make it attractive for men to have woman “on the job” with them, so to speak, whilst their wives are tending the fields, I do not know what it is. If sex is allowed, decriminalised underground in a manner of speaking, the industry will fill their quotas, we’ll clean up the streets by literally driving prostitution underground. It could even solve the skills problem. We’ll have a generation of people, conceived underground, who will unlike normal youngsters, take to mine work like ducks to water. The historic and traditional aversion to work, especially underground work, will cease to be a problem.


Death of an Industry

May 18, 2009

The bankruptcy of Pamodzi Gold is symptomatic of the dying South African Mining industry. With diamond mining reduced to the level of 19th century prospecting, scratching for a livelihood and the mighty De Beers, once prosperous and in total control of their destiny and market, now technically insolvent. The gold mining industry in South Africa with technical problems and challenges, are unable to find investors to start new mines. The platinum mining industry is struggling to maintain profitability in a realistic market environment. It is littered inefficiency, with BEE deals and unsustainable “mining ventures”.

Using the Pamodzi example and a bit of forward thinking I see Sentula finding a partner who will invest money to buy the “assets” at a rock bottom price. They will inject some working capital come up with a plan promising a pot of gold and raise more cash from the market. Mining will recommence the company will make losses but promises of future profitability will suck in the gamblers and the price of the stock will increase. A few people, mainly  management, investors and the astute dealers will make money, probably lots of it, however many people; greedy people, poor people and stupid people will loose money. Some will loose a little and say nothing to save them the embarrassment; others who lost a lot will kill themselves. When the mines reopen the unions and workers will rejoice. The Minister will laud the businessmen for showing confidence in the South African economy and the BEE partners will toast everyone for their contribution in making the rebirth of the mines possible. Being increase time the workers will embark on a strike for more pay. During the subsequent strike, management, under pressure, to keep the marginal operations going and to protect the revived baby from harm, brings in contractors to minimise disruption to production. This results in anarchy and the killing of a contract labourer by the strikers, causing the mine to grind to a halt. After severe financial losses, operations restart but a comrade dies in an accident and the workers down tools in sympathy. By now, the projected margins are paper thin or non-existent. A week later inspectors of the DME arrive for a “Blitz”. They find a worker not wearing his Rescue Set and issue a section 54 order. As a result, operations are generally suspended for 24 hours or more. The Mine Manager, a caring man, because of the stress and the threatened permanent closure of the mine dies of a heart attack. The mine in this period produced gold. Unfortunately, it was produced at a loss and no value was generated. The people who made this miserable tale possible will walk away. They will blame the markets but nobody will bother to deal with the real issues. During this time, five people died in road accidents and thirty people were murdered in the areas in which the mines operate.

Who would invest in such a venture? It is better to invest your money in a decrepit sewage plant gushing raw sewage into the Vaal River. At least the technology to clean human excrement is readily available and no one will call you a killer of people.

It is almost inconceivable. We are witnessing the demise of the South African gold mining industry. One of the two pillars that supported the South African economy for more than a century are crumbling right before our eyes giving rise to the obvious question; Why now; with the gold price at its highest level in 20 years? How do we allow an industry to die when we still have some of the biggest gold resources known to man? How do we stand by and see thousands of people losing their jobs in a country with the third highest unemployment rate in the world?

The reason for this is simple. Economics and the market. The cost of mining gold and the resulting lack of profitability of the business do not justify its existence. We all know that, or do we? Many do not realise the simple principle that the lack of profitability and resultant lack of competitiveness can, and will kill an industry. Conversely, and here is the dangerous part, many “leaders” who are aware of the ills of the industry, do not speak about it because it is not politically expedient to do so. I read an article in the M&G recently about a mineworker who religiously monitors the platinum price on TV. To him the price determines his continued employment or otherwise. The concept of profitability does not enter in the equation.. The sad reality is that he is only one of 400 000 mineworkers who hold this belief, people who believe that the mine owners set the price of the commodity they produce. Four hundred thousand mine employees do not know that cost has a telling effect on operations and they do not understand the factors impacting on cost. They only understand the “Market of Economic Myths” espoused by their leaders.

The terminal illness afflicting the gold mining industry stems from the nature and depth of our deposits. As a result, gold mining in South Africa, is technically complex. That should not be a problem. It took us one hundred years to get from reef outcrop to 4000 metres, a magical achievement. In the last 20 years, despite the increasing rate of technological development, we have gone nowhere because there was no money to develop technology Developing technology requires skills, expertise, investment and passion. The South African mining industry was built by hard work; the blood, sweat and tears of true pioneers. It was built by people prepared to take big risks in order to reap a well earned reward. Most of these attributes are now nowhere to be found. Skills fled, because of falling productivity, margins are paper-thin. The prevailing mood around the industry are characterised by a reluctance to face the truth, avoidance of tough decisions and a false sense that somehow a miracle will happen and all will be well. Today the culture in South Africa has changed. We must avoid risk, keep hard work to a minimum and reserve competition  for the sports field. Rewarding risk is politically incorrect, everybody have rights, privileges cannot be earned and should you by chance have skills or knowledge that, in the opinion of some, has been acquired unfairly, all efforts must be focused on avoidance of the effective use of that skills and knowledge. We live in an environment where people demand to eat eggs without breaking the shells. As a result of this madness, we have not seen any major gold mining project since the early nineties. Gold mining companies in South Africa are marginal and struggling whilst global companies operating in competitive market environments contain costs, maintain margins and deliver good profits. Barrick, Newmont and Randgold Resources are doing well whilst past have fallen onto bad times. The former king of gold, Anglo American, sold its gold division, Goldfields are struggling and the South African number three, and Harmony is a marginal miner. For the rest…nothing. South African gold production in 2007 was one third of levels in 1978, but more significant is that the period 1993 to 2007 accounted for two thirds of the wipe, certainly a rapid shutdown. Before we can even think of fixing the industry, we must face and understand the brutal truths facing us:

  • Mining has always been a risky and hazardous, so is motorcar racing and policing in South Africa. I am yet to see the SAPS strike every time a police officer is shot in the line of duty and many racing car drivers pay good money to put their lives at risk for the spectators. I can safely say it is more risky to just live in South Africa than working in a deep gold mine if you consider that the life expectancy of South Africans have dropped from 65 to 51 in the last fourteen years. For gold mining and mining to survive in South Africa, people are going to die.
  • Labour cost globally, and in competitive countries unlike in South Africa, are driven by supply and demand. Here, with abundant labour at our disposal we restrict employment through counter-competitive measures such as legally entrenched labour practices and unrealistic minimum wage levels. Artificially elevated wage levels with high unemployment are preferred to a market related living wage with low unemployment. People are going to have work harder for less.
  • Institutionalised laziness promoted by trade unions and political leaders in the name of ideology. The deliberate destruction of employment opportunities by declaring certain types of work as meaningless and undesirable, resulting in people resorting to crime rather than work. The power of the Unions will have to be broken.
  • A development fund can be created to develop the future and to allow our children to benefit from our resources, a reserve similar to the Norwegian Oil Model.

The Unions use safety to score points with members. They prey on the ignorant by portraying themselves as fighters for the poor and oppressed. In the process they keep their membership high and prevent the entrance of competitive alternatives

The CEO of Goldfields stated recently that Kloof reduced fatalities by withdrawing from remnants. Is he telling us the strategy is to withdraw until nobody is left underground? No work, no workers and no risk. It sound like a pretty good growth strategy and it should make the government and unions happy. Nic Holland, the hero killing all those meaningless jobs. Whilst researching and writing this, Anglo Ashanti results was published and CEO Mark Cutifani, in a very blasé manner of handedly fashion, painted a bleak picture for the future of Anglo Ashanti’s South African operations.

To return the gold mining industry to a growing industry we need commitment to profitability. Profitability will encourage investment in green fields projects and R&D. However, no amount of money will prevent the loss of life in the quest to conquer depth and nature. Maybe we need to be reminded of the number of people who died during the construction of the Panama Canal, the Hoover Dam and the conquest of space through space travel. Today we want to forfeit less whilst earning more than our predecessors who died to get us to 4000 metres underground.