Alec and partner at Grant Thornton, Jacques Barradas attended a talk by Mining Minister for South Africa Ramatlhodi at the Mining Indaba 2015 today. In this interview they discuss what was covered in the address, and why the audience need to percolate upon it.
Jacques Barradas was in the audience this morning, listening to Mining Minister South Africa Ramatlhodi. He didn’t quite get the applause that I was anticipating. He said some quite interesting things.
Yes Alec. Initially, he appeared to deliver a bland speech, but he raised some quite interesting aspects in his speech today. I think it took the audience a bit of time to digest what he was saying.
The whole story about constitutionality was interesting. I was at the Presidency on Sunday, where Jacob Zuma talked about throwing the MPRDA Bill back into Parliament because of the constitutional issues that might be at play there. Our Mining Minister touched on that as well. I don’t know if you have any insights into what he was trying to tell us.
I think that what he was pre-empting was that they want to change the Act so that they can really, bring through a broad based empowerment into it, and I don’t think that the Act (as it was in there) would enable the Government to do so. The Minister alluded to it, saying that the era of the individual BEE candidates is over and they really want to spread to the broad base.
That’s not before time. What do they call it? Black elite enrichment might now become black economic empowerment.
Yes. It has been an elite group of individuals, who’ve benefitted quite substantially out of the BEE Act. I think they want to spread that out, to get the communities more involved and uplift those communities, so that they don’t get the strikes they’ve had in the past.
Intentions are all right, but at the end of the day, it’s about investment. He said South Africa’s ready for investment. I’ve seen him around here, talking to the right people. Do you think the message is working through?
I think they need to reiterate it more often. He did start his speech with those words, to say that South Africa is ready for investment. We are open for business. He also said that they want to give investors the certainty that they’re going to continue business as usual and nothing will change in South Africa. If you have a mining right, they’re not going to take it away from you.
There was discussion as well with Zuma on Sunday, about the concerns of big companies taking over small companies and then restructuring them. Ramatlhodi did mention that in his speech.
Yes, he was pointedly referring to the major restructurings taking place and said they are keeping a very close eye on those restructurings. We applaud the Minister for that because we really want to see the benefit that the international companies receive from being involved in those restructures when it was all amalgamated in the early 2000’s; that those benefits still accrue to South Africa.
Of course, the big issue in the audience would have been ‘well, these are all nice words, but what about Eskom’.
Yes. Currently, Eskom is a problem and I think the Minister said directly, that if there were no power, no mining would happen. You could take it further and say ‘if there’s no electricity, there are no businesses’. However, he did give us a glimmer of hope to say they are looking at independent power producers so hopefully, the spread of electricity generation can increase in South Africa.
If you were a foreign investor listening to the Mining Minister of South Africa talking about power in the way that he did, would you have found that it was enough to allay your fears?
No. I’d like to see something a bit stronger coming from the Minister, but then again, he is the Mineral Resources Minister so I don’t think he can go too radical about that. That’s not his portfolio.
Talking about radical, there was quite a radical discussion on people who break the law when they go on strike. In South Africa, we know that until now, the benefit seems to have always been with the strikers, but some of the stuff that Ramatlhodi said might in fact, make business feel more comfortable.
Yes, it’s probably the first time we’ve heard it from Government – pointedly – was to say that they would take action against people breaking the law in terms of the strikers intimidating and looting. That’s very positive, for business to see.
It’s almost a step in the right direction. Whether it’s going to perpetuate or whether it’s going to change this militant issues that we have, is still an open question. Are you confident?
Yes. The proof is obviously in the pudding and we need to see the Minister follow through on that action, but I this is the first indication. The Minister was quite clear about saying that Government will take action, which is very positive.
Overall, what was your takeout?
My take is that more could have been said but overall, it was a very positive speech from the Minister.
Do you think that foreign investors might feel the same way?
I truly hope so, but I think there was enough in what he was saying to put a positive light on it.
Jacques Barradas is a partner at Grant Thornton.