Mining situation becoming serious: Government cannot sit on its hands
News that mining output in February fell 14% compared to a year ago shows that the situation in the mining industry is serious. It is unlikely to get much better until the government ends its regulatory paralysis and starts acting quickly to reverse some of the mistakes it has made in mining policy.
Conservative modelling suggests that a 3% to 4% growth rate in the mining sector would create 100 000 more jobs - the industry already employs half a million people. But this growth is looking unlikely and the resultant foregone investment will cost jobs. This is a dear price to pay for something which could be mitigated with governance planning and foresight.
Promised revisions of the legislation governing mining, the Mineral and Petroleum Resources Development Act (MPRDA), and government threats to impose more burdens on mining companies through a tougher mining charter are the backdrop to South African mining's endemic problems with anundisciplined labour force. These problems came to the forefront again during the recent strikes by platinum miners. Implats lost 120 000 ounces of platinum production and R2.4 billion in revenue.
Safety stoppages that are wielded as a blunt instrument have also had a massive effect on production and official promises to improve the situation have so far not been realised.
Government appears to be dragging its feet on reforms to legislation and the charter while it waits for policy direction from Luthuli House, which may only decide what it wants to do at the end of this year. If the industry continues in policy uncertainty until then, particularly with the threat of new tax and performance burdens being directed at the industry, output will either stagnate or continue to fall.
The government needs to realise that a number of problems in the industry are directly attributable to its own failures. It needs to take urgent steps to fix unworkable policies, and convince investors that there will be regulatory stability.
It also needs to improve the performance of its processes involving licensing and inspections.
The industry is currently being strangled by slow and inefficient processes, and the results are clear to see. South Africa is missing out on new mining investment and on the jobs that such investment would bring with it. Even worse, we are faced with job losses from a declining industry.
Government can no longer sit on its hands. It must act to save the mining industry from ten years of misconceived policy and poor implementation.
Statement issued by James Lorimer MP, DA Shadow Minister of Mineral Resources, April 13 2012
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