South Africa missing the point…and the cage

March 4, 2011

As South African mines minister Susan Shabangu launches a North American roadshow, the Toronto-based Fraser Institute is releasing its 2010-2011 global mining survey, which ranks South Africa 67, of 79 jurisdictions across the world.

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.

Advertisements

The Zuma economic nightmare

February 21, 2011

I have often written, going back a few years, that major global resource companies – scared of the usual suspects, the ANC created regulatory environment, labour blackmail, rhetoric, the total absence of security of tenure, blatant theft of mineral rights and the consequent unacceptably low margins and returns and general insecurity – slowly divesting from South Africa. With few major long term projects able to deliver suitable and sustainable returns to justify the risks to these extremely long term investments it would be rather stupid to expect investments and sooner or later South Africa will, for the sake of jobs and development, will have to beg these people to return un terms worse than ever before, conversely they can invite a different entity, China or India, who will most certainly not invest on terms more attractive than that acceptable to current investors.  

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.”


Jacob Zuma’s Leaking Begging Bowl

August 26, 2010

Tom Albanese, CEO of Rio Tinto, said that said the company was “underinvested” in Africa. This hot on the heels of the announcement recently that Rio Tinto sold a large part of their stake in Palabora Mining and a large proportion of their prospecting and mineral rights. 

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


The ANC, Australia and the Super miners

June 11, 2010

 

Some may wonder why South Africa missed the boat, so to speak, during the last resource boon. Why did most resource rich countries, notably some of our African peers and in particular Australia, outperform South Africa by miles?

The answer lies in the policies of the ruling party, and not having learned a thing, the brilliant Fred Gona, chairperson of the Parliamentary Portfolio Committee on Mineral Resources, having flipped the Chamber of Mines the proverbial bird by not reading their objections to the course being plotted, are dead set on engineering a “compromise” that will satisfy Julius Malema’s nationalisation dreams and the Anti-Malema faction with the establishment of a state owned super mining company to be managed in the same effective manner as ESKOM, SABC, Denel, Transnet and SAA; a company which will, with the assistance of the taxpayer, distribute great riches to the deployed and their patrons. Like Malema, the well informed Gona assures us that, despite popular belief and countless reports to the contrary, South Africa remain the most mineral rich country in the world.

Ever wondered why foreign investors are not falling over their feet to invest in this untold mineral wealth? To add substance to the learned Mr. Gona’s claims we just have to look at the Pamodzi/Aurora great gold venture. For those who have not followed the saga; a year or so ago, Pamodzi Gold Mining Company – a company scavenging off the remains of mostly worked out gold mines, effectively abandoned by the bigger players reluctant to invest in these carcasses because of prohibitive regulations, restrictive labour practices and other risks – ran out of cash. Having assured investors of a major foreign investor, who subsequently miraculously disappeared, they; Pamodzi, went into liquidation with the only benefactors the BEE partners and their patrons – the directors.

The liquidators soon announced that Aurora, a company high on big names – Zuma, Mandela and Hulley better known for mining dirt in Presidential trials – but light on management savvy; with the backing of a filthy rich Malaysian, will take over Pamodzi. For good measure they will ad Primrose Mining who owns mines that were mined to extinction a century ago, to their magnificent portfolio. The Malaysian disappeared into the remote forests of Borneo it seems; the mines produced nothing but polluted water which was pumped, untreated, into the surrounding streams; the workers were not paid and apparently starved of the property but these small challenges did not deter the great new age miners. They soon found a new backer but somehow the tight fisted greedy bastard became dodgy and, much to the delight of many – including the great number of ANC parliamentarians who lauded and cheered Malema’s nationalization submission to Parliament – the liquidators announced that a Chinese Consortium are preparing an offer to take over this poisoned chalice.

Given the hullabaloo over the super mining tax proposed by the Australian Government, with the giants of the Mining world BHP Billiton, Rio Tinto and Xstrata threatening to take their toys and go play elsewhere, many must be wondering why the global miners are so relaxed about the intention of the ANC and the future of their investments in South Africa, especially in view of Gona’s tales of the untold mineral riches lying below our soil. Truth is; they’ve are here; they’ve experienced mining in South Africa and they don’t like. The big players do not trust the direction of the industry, they dislike the uncompetitve labour set-up and anarchic unions demanding pay way beyond their skill level; they do not take kindly to the implied and the real threats to their tenure. Knowing Africa however, they remain condescending. Their attitude; keep quiet, patronize them whilst sweating the assets, discount the in the balance sheet, they build for the distant future, twenty-thirty years hence, when, like with Zambia and the DRC, they can walk right back in, this time invited, and, in the ashes of a decimated industry find a few embers to nurture and build into new industry on their terms.

The rosy picture of our mineral wealth, pictured by some, is belied by the behaviour of BHP Billiton, a company with its roots in South Africa and being steered by a South African. They have sold much of their interests in South Africa; amongst others a thriving Chrome and Ferrochrome business and diamond interests, simultaneously allowing licences and options in other minerals and oil to lapse. The BHP Billiton exit strategy is simple, milk ESKOM for what they can, sweat their coal and manganese assets and avoid green fields projects investment.

The BHP Billiton model is closely followed by others. Rio Tinto, chaired by a South African, has not made a significant investment in South Africa for ages, preferring to invest in Zimbabwean Diamonds and Namibian Uranium whilst flogging a large part of their stake in Palabora Mining Company, a dying and marginal asset, to BEE entities. Barrick, the world’s biggest gold miner only maintains a token presence in South Africa whilst expanding their operations in Tanzania. Norilsk recently got rid of all the technical expertise housed in their Johannesburg office, deciding to maintain a small administrative staff to keep an eye on their joint-ventures with the likes of ARM, whose chairman Patrice Motsepe, is not against nationalization as long as he gets enough for his, not insubstantial, chunk of worthless Harmony shares. Meanwhile Xstrata, another miner being steered along by a South African, having dipped their toes into Platinum mining with their Angloplats joint venture and a small investment in their own Elands Platinum Mine are not prepared to convert their 25% investment in major platinum player Lonmin into full ownership and are seemingly reluctant and circumspect with any new Ferro Alloy and coal investments, probably considering the risk as excessive.  

It is ironic that the mighty De Beers – on the bones of their backside because of some worthless South African assets and the loss of their marketing stranglehold – consider sending their explorers trudging, like Frank Zappa’s Nanook and the evil seal hunters, across the Canadian Tundra, to dig through the perma-frost and the deadly yellow snow (where the Huskies go) so that they can mine the rich diamond veins lying underneath freezing lakes, less risky than investing in South Africa. Anglo Ashanti would rather invest in the war torn DRC than in South African gold projects whilst Randgold Resources would, according to their great African Leader – Mark Bristow, rather face the logistical nightmare of building mines in godforsaken parts of Mali, Ivory Coast, Senegal, DRC amongst other, than face the insecurity of super miners like Gona and his political backers Malema and others. As if all of that is not convincing; the mighty Goldfields, unable to make much from “the biggest known gold-resource” in the world – South Deep, are now celebrating the success of their exploration teams discovering new deposits in Peru and whilst the production from South Africa are shrinking with the dawn of every new day; their investments in places like Ghana, Peru and Australia – in some instances they have to build their own power generation plants – are showing excellent returns in the wake of a high gold price.

To think that study tours to Venezuela will bring answers is rather foolish and a thinly veiled reason for another overseas trip. Perhaps the wannabee miners like Gona, Malema, Kulubuse Zuma and Kodwa Mandela, their friend Hulley and others like them should visit 3762countries that are struggling to rise from the ashes of socialist agendas and learn how to stay out of the quagmire. Perhaps Jacob Zuma should’ve dragged his friends from COSATU of to India to see how they the Indians work and find out why they can be competitive.

In Australia, when Kevin Rudd announced his populist “mining super tax”, his ratings initially shot up. However, the Aussies being relatively educated, and having assessed the effect of this tax on the goose laying the golden eggs, are now giving Rudd the thumbs down and his ratings are dropping. In South Africa, if a politician conjures a populist hair-brained scheme, any opposition to that plan will result in thinly disguised threats and punitive measures by deployed cadres, making life impossible for such opponent whilst hardening the resolve of government to destroy. Makes one wonder; what did those convicts that built Australia have?


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.


Transformed to Death

November 4, 2009

Before dismissing Susan Shabangu’s recent outburst – when she unleashed her unwarranted, vicious and, frankly, ill informed attack on mine owners and managers – as populist and Malema-ish, should consider her influence in the upper echelons of the ANC and government. Those dismissing her ranting as ill-informed vitriol are well advised to take note of the fact that the President and Bheki Cele’s favourite and general flavour-of-the-month, “Shoot-to kill” slogan was originally coined by the same Shabangu in her role as Deputy Minister of Police. Now, we all know that once a term is accepted and embraced by the alliance, it automatically elevates the creator to “struggle-hero” status and we know you do not mess with ANC icons.

The honourable Minister had the temerity to suggest that the mining industry does not do enough in the way of advancement of blacks. She accused the sector of falling short in skills training, this, despite the fact that the mining sector has been singled out as having done more than any other South African industry in the field of skills training and development. 

What the Minister conveniently forgot when calling for more black managers in operations is the small, but very critical, predicament that the schools, because of government’s lack of delivery, cannot supply sufficiently educated people to tertiary institutions for training in technical fields. The few engineers that do obtain degrees and diplomas are either white or get their qualifications at the behest of mine owners who walk the extra mile to ensure the success of their black students.

Once the students passed the degree or diploma course required to enter the industry, some, due to lack of motivation and a boycott culture, again instilled by the government of the day, having enrolled for industry examinations do not bother to turn up for the examination or perform abysmally because of a non-existant learning culture. The low quality od education are acknowledged widely throughout the government leadership with Shabangu and the Minister of Education probably the only leaders oblivious of the problem. The people singled out and chosen to lead the industry are producing the worst exam results the industry has seen – the leaders of the future, it seems, requires a lowering of standards, against which their success will be measured – entitlement before competence it seems. Possibly a good thing since it may reduce their chances of spotting their Ministers incompetence. 

Shabangu’s singling out of procurement and ownership – as the areas other than operations to be targeted – are perhaps more surprising than her crusade for faster transformation in operations management. The reality is that, as in training, the mining industry has done more than any other industries as far as black ownership is concerned. According to the Chamber of Mines, the industry handed more than R 200 Billion in value to black owners in the last seven years. The BEE efforts has been so successful, the honorable minister’s comrades in NUMSA are for the nationalisation of the wealth of the two most successful recipients of BEE handouts, Sexwale and Motsepe. 

The demand for more black power in procurement management seems even more mystifying to the uninformed observer, especially in the light of ESKOM’s spectacular failure, to a large extent, as a result of the transformed procurement function in that desperate organisation. 

Analysing the three areas singled out for accelerated and revolutionary transformation, one finds a golden thread running through it. The Golden Thread of empowerment for the selected few; Labour wanting more managers and less work for more money; the new ruling elite needing their fair entitlement to ownership whilst their cronies demand unhindered access to the huge spending power of the mining industry.   

By waving the review of the Mining Charter as a stick, to beat mine owners with, serves little purpose in encouraging investors to enter and or re-enter a key industry and major supplier of desperately needed employment. Contrary to the teachings of the ever popular, “Struggle Economics for Dummies – A South African View” by Julius Malema, threats do not entice investors to part with their money draw investment. Consequently, major global miners are leaving our shores in droves, scared of by government regulation, labour cost and labour relations. 

Shabangu whilst admitting the negative effect of the Minerals and Petroleum Resources Development Act of 2002 and the Mining Charter V 1, in the same breath, blames mining companies for not fighting the effects of the law with more dynamism. How far removed from reality is that? Does the minister suggest a man, working in the WTC on 9/11, could’ve saved his life by standing in the window, gesticulating wildly at the approaching aircraft, in a desperate attempt to aim the gargantuan missile at a higher level in the building – hoping that, if successful, it will leave him an opportunity to flee down the fire escape – before all hell brakes loose. 

The reality is that the South African mining contracted during the boom years whilst mining grew by 5% and more in most other countries. The contraction is attributable to government policy (BEE, AA and tenure of ownership), the LRA, unrealistically high wages. Mining in South Africa has become so expensive that Xstrata can now mine steam coal in the USA cheaper than in South Africa. Because of the present mining investment milieu, global miners like BHP Billiton, Rio Tinto and Barrick has stopped investment or at best have their investments pegged to sustain current operations. In many instances, the major miners have moved capacity elsewhere. The only remaining foreign investors are Toronto Securities Exchange gamblers and Canadian Minors investing in platinum. 

Given the Minister’s threatening demeanor, combined with the ascendancy of the unions and the ESKOM disaster looming large, we can expect the situation to worsen rapidly in the next five years with the ultimate collapse of the industry inevitable. 

The ill-informed views of Shabangu can be ascribed to incompetent, under-qualified and inexperienced officials in her department. Officials in the Deparment of Minerals are not unlike their incompetent peers in other departments, the main difference being Shabangu, who unlike her peers, prefer not to hold them accountable, probably not understanding what they do. I’m almost certain her DG must have informed her of the dismal performance of prospective managers in industry exams.   

Malema’ call for nationalisation, initially backed by Shabangu before making the familiar U-turn should not faze owners too much. Given the fading fortunes of the industry there will soon be very little to nationalise. Perhaps Shabangu believes her populist attitude will bring her glory in the gloomy future she perpetuates. 

Maybe the minister should stick to her knitting and join the free-for-all killing spree she mooted during her tenure as Deputy Minister of Police.


Application For Membership

July 10, 2009

                                                                                                            July 4, 2009

The President

Association of Mine Managers of South Africa

PO Box 61709
Marshalltown 2107

Dear Sir,

Application for Membership (Class – Ordinary)

I wish to apply to become a member of your esteemed organisation. There is however a number of issues I need to clarify. Your constitution clearly states the requirements for ordinary membership but there may be a few grey areas in my case. Let me explain.

I am manager of a mine in the Free State, Elands Mine, an operation you may be familiar with since we have been, like many other mining operations the world over and particularly in South Africa, on the receiving end of some negative and, may I say, unfair and unwarranted media attention. The media campaign against us because of an unfortunate, isolated incident of minor consequence resulting in the fire that killed a few unfortunate workers can only be described as a travesty and exceeded the norms of fair reportage. Truth be known, had it not been for the lack of cooperation from the so killed called, “formal mining sector“, this incident would never have occurred. Matter of fact, had it not been for this misguided action of a confused worker nobody outside our organisation would have known about the incidence. As a mining man, you would understand these things.

In support of my application, I have a Mine Managers Certificate of Competency, which I legally purchased when I was working on the Platinum mines in Rustenburg. A friend, employed at the DME’s office in Klerksdorp, will confirm it is kosher, should anyone decide to do checks.

There are currently about 1500 people employed in the operation, this number fluctuates since workers disappear in the “madala sites” from time to time, others just abscond, a cultural trait of my brethren that will never seize to amaze me, resulting in a need to recruit replacement which, as you well know is not so easy these days. Not with the lowly skilled and lazy riff-raff out there. It is also not possible to give you an accurate estimate of tonnage mined in the operation. We have learned that “grade is king” and we measure output in ounces only. I found that linking earnings to ounces, I get better performance and we do not need “hangers on”, such as surveyors and grade controllers.

I believe my experience can add substantially to the body of knowledge of your esteemed organisation. The nature of our operations necessitates unorthodox methods and entrepreneurial thinking, which can assist people like you and I to reverse the shrinking trend that besets our industry. The fact that we are successfully mining in areas, abandoned by the formal mining sector, proves beyond any doubt that we have a working model.

Areas of operations in which my knowledge can be of particular importance is training and multi-skilling of employees, most of our people are skilled in the entire value chain, from exploration to final product. We have people in our employ who specialise in logistics, a particularly daunting challenge if you consider workers live underground for extended periods, quite an achievement since we do not have the luxury of hoisting facilities as you know it. I always say, “We find, we mine and we process”.

Although we are not bound by DME rules and even though the Minister denies us our constitutional rights to make a living, we do take safety seriously. Excluding the unfortunate fire that resulted in the so-called, “Illegal Mining Disaster”, we have been doing very well in work place safety, with our safety record improving every year. Last year we had an estimated fifty fatalities and this year, excluding the fire deaths, we had only forty. The real improvement can be seen in the number of amputations reported. It came down from 150 last year to an estimated 90 this year. These numbers, I can assure you are correct. My son, who passed Mathematics Literacy at school, is the chief statistician for the company and he can teach you a lot about statistics.

I will also contribute my experience in the in safeguarding of investments against the likes of Jelly Tsotsi Malema, his Buti Malemela and Ballcrusher Vavi with their plans for a hostile takeover of the mining industry. We have established tried and tested defense systems against this type of hard-line guerilla tactics. Our people had training from the best in anti-insurgency and defensive warfare, which we adapted for underground conditions and include the use of grenades, anti-personnel mines, deadly gas, not to mention guns, that’s right, we are the reason the President can’t find his machine gun…we’ve got it. We do not use guns too often underground, only in close combat; ricochets can be dangerous in that environment, whilst poisonous gas, ingeniously used with the ventilation flow, is very effective.

Cynthia Carroll will vouch for us on this one, I recently advised her on defensive systems against the threat posed by that Swiss company with the funny name and Swiss Army Knives as main weapon for “hostile” mergers. We know how devious the Swiss can be. War after war they pretend to be on the fence just so they can lay there frostbitten hands on the gold. It will not surprise me in the least to find they swindled the poor Paul Kruger out of his gold, for all we know the Kruger Millions have been stashed in a UBS vault, in Zurich all the time, whilst treasure hunters are running all over the Mpumalanga countryside looking for gold . It is also quite conceivable that Paul Kruger set this up all those years ago to take revenge against Anglo, whose founding fathers, were in many quarters considered British agents and conspirators in the oppression of the “Boere”.  

I can tell you a lot more, but I’m sure you get the picture. I’m looking forward to the many opportunities, we will have to chew the fat, or shall I say chew the Crayfish, whilst drinking copious amounts of John X Merriman and Blue Label at those famously wild monthly meetings I heard about.

Yours in Safety

Sticksaait Chugumisa