State lashed over mine chaos

Politics and platinum made for a toxic mix this week, with the government quick to point a finger at Anglo American Platinum (Amplats) for being a "reckless" destroyer of jobs in the country.

The announcement that Amplats plans to restructure its business and consequently endanger 14000 jobs left Mineral Resources Minister Susan Shabangu furious and dishing out threats to take away Anglo American's mining licences that were not fully compliant with the Mineral and Petroleum Resources Development Act (MPRDA).

Webber Wentzel partner Peter Leon said Shabangu's initial reaction to the Amplats restructuring was "unhelpful, emotional and regrettable".

"If you look at the Department of Mineral Resources' response to Amplats this week, and what happened in relation to the mining industry post-Marikana, which was pretty much dead silence, it all rings rather hollow," said Leon.

Labour analyst Loane Sharp said Shabangu must "pull herself together" and realise that a dramatic turnaround from government is needed to avoid more job losses.

"Government has stumbled from crisis to crisis without paying attention to the possibility that they might have caused the problems we observe in mining. The real casualty of government policy and attitude is mining employment," said Sharp.

According to Sharp, mining employment fell from 1.2million jobs in 1994 to 523000 in 2012, largely because of government-induced investment uncertainties in the mining sector.

"In 1994, we had a rock-solid mining industry with a good mining reputation internationally and lots of foreign investor interest. Policy uncertainty, onerous safety regulations and chaos in the issuing of mining licences have seen a total collapse in investor interest in the mining sector.

"Amplats job losses are not new, it's part of a long-term structural trend of mining in South Africa that the government itself has contributed to," he said.

Another 6000 jobs are at risk at Harmony's Kusasalethu mine near Carletonville.

Harmony refused to reopen the mine after the Christmas break, citing security concerns following illegal stoppages and protests at the end of last year that left two people dead. Discussions between the miner and unions continue.

Sharp expects 200000 more mining jobs will be lost in the next three years if government does not change its way of doing business.

Leon said the Department of Mineral Resources should be trying to help industry at a time of crisis. "That requires, from the government side, creating the right enabling environment for investment. Mining companies don't like retrenching workers. This is a huge step for any company to make. There seems to be a fundamental lack of understanding of market economics," Leon said.

Platinum miners are facing weak demand and price increases have not been able to offset spiralling costs.

European vehicle manufacturers, the biggest buyers of platinum, reported the biggest year-on-year decline in new car registrations in two decades in 2012, with large manufacturers expecting further declines this year.

The draft MPRDA Amendment Bill, approved by the cabinet in December, is another cause of concern for investors, Leon said. The bill fails to remove ambiguities in the MPRDA, Leon said.

Joseph Matunjwa, president of the Association of Mineworkers and Construction Union, suggested government take over and run the mines Amplats wants to close.

But ANC secretary general Gwede Mantashe said the government has no plans to nationalise unsustainable mines.

Nomura analyst Peter Montalto said the idea of government taking over the mines might not be a bad one.