Can you hear me now?

28 Aug

A recent mining conference in South Africa was quite instructive as to the level of communication, or non-communication, between those in the mining world and those in the political realm. A study was presented to the conference by an independent survey company which laid out some disturbing comments from major mining executives as it relates to  their future involvement in South Africa.  One of the comments that struck out from this survey was that some executives thought ” Both South Africa and Zimbabwe are driving social experiments not driven by logic and economy but by ideology. In the absence of reason, primary industries become the cash cows to fund the unfundable.”  This conference is taking place against the backdrop of new wage talks among both platinum and gold miners in which both are asking for high double digit rate increases  in the context of falling precious metal prices.  However, the comments from the government were most telling.  The Deputy President proceeded to inform the conference that “the mining industry, supported by discriminatory legislation, has developed methods of making super-profits by relying on the super-exploitation of unskilled workers”.  The most confusing comments from government however were made by the Finance minister Pravin Gordhan who stated that “South Africa is not going to become competitive by all of us sitting on our laurels”.  I am not sure what laurels he is speaking of, when the industry has a workforce that is 25% less productive than it was 10 years ago and a cost structure that is hampered by excessive power costs rendering at least 60% of most platinum companies unprofitable at current price levels.

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