The Great South African Mining Disaster

February 24, 2010

Nic Holland, upon taking over at the helm at Goldfields, vowed to close down working places considered a safety risk. Being a man of his word and having the integrity of an old-style accountant he carefully assessed the risks and duly started shutting down workings considered to risky. Having not done the “Mining Math” properly in the first place, he found, perhaps too late, that he will eventually have risk free operations. That was however not the only reality that dawned upon him – he also found no risk means no gold and after all, that is what Goldfields is all about – mining gold. With every risky place they stopped the gold output fell inexplicably; A difficult concept? Not really. Most call it common sense. As the saying goes; you do not make scrambled eggs without breaking a few eggs.

Nic Holland was not the only one trying to get rid of the “risky” operations. Anglo American’s Cynthia Carroll went a bit further and sold all of AngloGold Ashanti, getting rid of a whole whack of dangerous operations in one foul swoop. She went further and then publicly claimed a massive reduction in mining related fatalities at Anglo – a novel variation on the concept of selling your problems to the uninformed – in this case selling your deaths, sweetened with a splattering of gold to the unsuspecting foreigners. Fortunately in this case the foreigners got a bit more than a smattering of gold with the Africa operations that came with the South African assets. My reckoning; if Julius and friends succeed in nationalising the South African mines with compensation the foreigners can get rid of the South African poison pill – the deal of a lifetime.

As this drama continues to unfold, South African mining production continues to fall sharply. At a time when the gold price is at its most favourable in decades, South African gold production has reached an all time low of 232 tonnes, less than half the 490 tonnes produced in 1985 and falling ever faster. Ironically, as the gold production from South Africa was dragged down by labour issues, government regulation and risk aversion, output from the rest of the world, particularly the rest of Africa and China rose sharply.

Looking at the latest round of reporting by mining companies, it is particularly noticeable how many companies reported a great number of production days lost due to safety issues a new inclusion in their reports. As in the case of Goldfields, the South African mining industry will come to the realisation that the easiest way to ensure no risk is to shut the mines down.

With the loss of 15 000 jobs in the mining industry in 2009, a year when resource prices were showing a recovery  from the global recession with the gold price reaching an all time high, South African mineral production continued to fall.   

Having said that, it is particularly noticeable how the cause of accidents and the reasons for Section 54’s, Mine closure orders, are glibly attributed to the owners and management. When an incompetent and reckless miner, holding a certificate issued under the auspices of the relative government department, blows himself and his colleagues up by smoking in an area which he has tested as being laden with methane, management is blamed, the mine is closed down and the bad and twisted – by the Union and the Department of mineral Resources – publicity, loss in production and subsequent revenue loss accrues to shareholder.

No wonder Patrice Motsepe is so keen to give his mines to Julius Inc., compliments the South African taxpayer. He learned from Cynthia Carroll.

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Little Lies

February 10, 2010

It is disconcerting the manner in which everybody, from the President, including ministers and Chief executives, twist and distort facts to suit their little agendas. Even worse, is the manner in which they proudly tell their convoluted truths, not in the slightest concerned that their reputations may be harmed should they be exposed?

The same people who claim they are adhering to all principles of good governance unleashes their half truths on a public, punch-drunk from being bombarded by nonsense espoused by the pillars of society.

I am not talking here about politicians from the governing party or even politicians in general. We have come to expect lies and deceit from our politicians. Truth be said, we are disappointed and feel robbed if they fail us in this regard. No. I’m speaking of Cynthia Carroll, upstanding leader of the once mighty Anglo American.

Desperately fighting for survival, the once hailed saviour of a faltering organisation – like the legendary Phoenix or using an example closer to home, Shabir Shaik – rose from the ashes and flattened delegates at the annual Mining Indaba, when she proudly announced a staggering safety performance at Anglo American.

According to Carroll, Anglo reduced the fatalities resulting from mine accidents from 44 in 2006 to 19 in 2009, an improvement of 42% over three years.  A remarkable achievement, unless you dig a bit deeper to find that Anglogold Ashanti, responsible for 32 of the fatalities in 2006 are excluded from the 2009 figures by reason of Anglo American’s disposal of that asset in 2007.

Looking at current Anglo operations it should be noted that fatalities at Anglo Platinum remained flat at 17 – 18 fatalities through 2006 to 2008. In 2009, with fewer people employed and more of their production and revenue coming from joint ventures, resulting in lower risk, fatalities decreased to 13. A reasonable performance? Yes. Spectacular? Not in my book.

What it does teach us is to tell a convoluted story, peppered with twisted facts omissions and half truths. You may get away with it for a while, fooling even the so-called experts and informed. However at some stage you will be caught out and people will snigger when you make your profound statements; some may even tell you to your face that they feel insulted by you underestimation of their intelligence.


The Death of a Minister

February 8, 2010

With eminent miners, Nic Holland’s and Nicky Oppenheimer’s, expression of faith and confidence in mining life in South Africa, according to Susan Shabangu, potential investors and mine owners alike can be forgiven for thinking everything was hunky-dory.

Their belief, that the nonsensical and poorly written discussion document released by the ANC Kindergarten is nothing but a hallucination and a bag of typical Malema hot air, is totally understandable considering the utterances by Jeremy Cronin and Gwede Mantashe on Nationalisation. But then, what do Holland and Oppenheimer know, spending the bulk of their time plotting their divestment from South Africa they are bound to be slightly out of touch with reality.  

Shabangu, in the mean time, having assured investors that mines will only be nationalised over her dead body, must have seen her life flashing by for a moment on Sunday when Chairperson and stop-gap Ex-Deputy President, Baleke Mbete, informed ANC heavyweights that ministers and cadres should familiarise themselves with the content of the much-vaunted aforementioned position paper. As for the hapless white-Messiah, Jeremy Cronin, one can only wonder what the future holds.

It seems Shabangu’s past contributions – notably the shoot-to-kill policy, subsequently hi-jacked in spectacular style by Fikile Mbalula; mentor and friend of Malema – counts for nothing as she fights for her life, so to speak. Jeremy Cronin, unlike Kortbroek van Schalkwyk and Barbara Hogan, despite his many years of experience in struggle politics, still do not know his place in the pecking order.

From Mbete’s stance it is patently clear that the views of Malema prevails with the ANC heavies and the Long Schlong himself, who briefly popped out of bed to put to make it clear which hole he is drilling in a manner of speaking. It seems Malema, the Long Schlong’s love child and favourite son – according to that much respected genealogist, Mr. Ben Trovato, wields a bit more power with the elders than the inconsistent Shabangu and the dapper but naïve Cronin.

My advise to Oppenheimer and Holland; “Hedge your bets and, like Cynthia Carroll and so many others, go to Luthuli House and join the queue at Malema’s door. Perhaps the rotund little boy can find it in his heart to arrange a deal with the new movers and shakers in the Mining Industry, Mandela and Zuma Inc.


Nationalisation – A Matter of Life and Death

February 4, 2010

The nationalisation debate or non-debate, depending on your perspective, could become a matter of life and death it seems. Given the quarters in which the discussion rages at it fiercest, where stabbings and burnings are at the order of the day, some statements by major protagonists could  turn out rather prophetic.

I am referring of course to the spat between the Minister of Mines and the ANC kindergarten. Malema started this dice to death when he stated that nationalization of mines will happen in his lifetime, which means – given the average life expectancy of the South African male being down to 47 – the window for this envisaged nationalization of mines, particularly gold and platinum mines – Malema’s stated target – cannot be too far away. Those having false hopes that the window may be enlarged by Malema’s longevity, think again – the tsotsi’s obesity problem is likely to make the window even smaller and he,  realizing the risk,  are upping the ante on this matter.

Susan Shabangu, in reply to the Tsotsi, and in a desperate attempt to calm the nerves, told mining investors – already suffering jitters when they hear the words South Africa  mining and investment spoken in the same sentence – that nationalization will only happen over her dead body.

Shabangu’s statement are contrary to her position only a few months ago when she made her “State of the Industry” address, stating emphatically that mine owners will wish her dead for various reasons. Ironically, that same mine owners are now praying that she outlasts Julius.

However, those naively pinning their hopes on Shabangu, dare I remind you that the same Shabangu has made a number of U-turns on this subject? The statement by the DMR that state ownership of strategic mineral mines is just another form of nationalisation – nationalisation by stealth so to speak.

Anyone trying to get clarity from Gwede will be left justifiably confused, as Chris Barron found when he interviewed the “Jumping Jack” last week.

As for the leading fornicator, he is too busy building a nation to care about insignificant and boring little debates amongst the minnows. That is the stuff that his “Loottenants” deal with.

Anglo America, hedging their bets will not be derailed by the confusion and Cynthia Caroll, whilst promising a bail out for ESKOM and a great partnership in “strategic” coalmines, are reportedly consuming copious amounts of Chivas with the Tsotsi, discussing compensation for nationalised mines – anything rather than getting into bed with Mick Davis.