President Zuma’s Last Chance To Save Gold Mining In SA

A momentous few days for South African mining occurred this month, particularly on 9 October. The South African government and the country’s largest mining union and major mining companies gathered at two different venues and told each other – and the audience, country and the world – how important mining was to South Africa, and how all three of these important groups would now do whatever was necessary to ‘save mining in South Africa’.

But is there still time? Is it not too late? And are these three major role-players – these three true engines of mining in SA – really willing, let alone able, to stop the 10- to 20-year downward slide we have seen in this country’s mining industry?

No one knows the answers to these questions, nor will anyone know for at least a few more years. For example, the reconstruction of decimated Germany and Japan after World War 2 took nearly 20 years, with 100% active participation and effort of every citizen in those countries. So it is fair to say the same will be needed in SA for at least the next 10-15 years if we want to get our mining industry back to the forefront globally.

The 2014 Joburg Indaba: Investing in Resources and Mining in Africa – was a platform that enabled an over 90% focus on SA. And its heavyweight speakers ranged from Mineral Resources Minister Ngoako Ramatlhodi, Gwede Mantashe and Frans Baleni – past and current secretary-generals of the National Union of Mine Workers (NUM), to Anglo American CEO Mark Cutifani, as well the CEOs and chairpersons of major and junior mining companies and other important South African stakeholders.

The other parallel heavyweight mining indaba – The Mining Sector National Consultative Forum – took place simultaneously in Pretoria, and was convened by President Zuma and led by him and his Deputy President Cyril Ramaphosa (the founder and first president of the NUM). This forum was attended by government, labour and business, and the deliberations were to reflect a collective commitment to the future of mining in SA.

Wonderful, fabulous, all well and good, and long, long overdue – but is it enough? When are we starting, and how are we going to implement, monitor and drive this 180-degree turnaround?

A picture is worth 1000 words. And a graph is worth a 100 pictures. But what graph would best encapsulate the dilemma and environment in which South African mining now finds itself? Is it total employment in SA’s mining sector – falling from +800 000 employees in 1987 to less than 500 000 today? Is it total gold production – falling from 638t in 1986 to 167t in 2013? Or is it total underground tonnes of gold ore – falling from 80mtpa in 1978 to 30mtpa in 2013? This is all on the back of a fairly strong gold price environment over the past ten years and the fact that SA still possesses some 40% of all the world’s known gold resources! How about a graph illustrating the metres of shafts sunk in SA’s gold mines? Certainly that should illustrate to government why this country’s gold industry now employs only 132 000 people, as opposed to the 
550 000 employees it had in 1987?

In 1987, SA had 30 million people, of which 2.5 million were unemployed, produced +600tpa of gold and had 40% of the world’s known gold resources. From 1900-1972 gold had averaged $383/oz in todays terms. However, today gold is $1200/oz, SA has 54m people, 7.5m of whom are unemployed, and we continue to close gold mines and have stopped sinking shafts. Why? If Apple, Microsoft, Google, Facebook and most other information technology companies have learned to grow every year in an environment of constantly falling prices for their products, why can’t we grow our gold mines every year in an environment of constantly rising prices?

Do government and the unions decide and dictate all aspects of work and pay in the US and the world’s industries? Do they decide entry-level wages and up for these various industries’ pay scales? Do other countries’ governments, unions and populace demonize and threaten their champion industries to brainwash the masses and score cheap political points and votes? This is what has happened in SA over the past 20 years, and this is why our mine productivity is lower than it was 20, 30 and even 100 years ago, depending on the commodity.

People outside of SA are proud to say they work for Apple, Microsoft, Google, Barrick Gold, Rio Tinto, AMAX, Anglo American, BHP Billiton and other industry behemoths. People beg to work for any wages at these and other companies just to get a foot in the door – just to have an opportunity to learn and grow and develop. Why SA, over these past 20 years, has seen fit to do the opposite and to promote open-pit mines that employ one tenth of the people, and that import all their fuel and equipment, is unfathomable. For a century this country made full use of the underground mines to absorb the uneducated masses, teach them skills, and provide them with an income and stepladder to improve themselves and their families. And these same underground mines employed ten times the number that an equivalent open-pit mine would, and their destruction of the environment was ten times less as well.

Let us hope and pray that the two Indabas held this month motivate our leaders enough to go to the masses and tell them they have been misinformed all these years, and that the mining industry is not their enemy, but their fast-ageing and diminishing friend, who needs their full unbridled support to survive.