Malema’s Mines; The end of the Road?

September 8, 2010

As a result of a “Beneficiation Policy” existing pre-1994 South Africa moved from being a primary Chrome Ore exporter in the 70’s to the world’s biggest Ferrochrome producer in the 80’s with output of ferrochrome reaching a peak in 2004, never realising the full revenue potential of the resource boon that ended towards middle 2008. Pre-1994, as a result of the vision, the availability of ferrochrome, the knowledge, skills and the other required resources, a fledgling Stainless Steel developed – a development that came to a grinding halt post-1994.

 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.

Advertisements