How world sees SA: Ramaphosa can re-ignite mining by changing BEE charter

EDINBURGH — The Anglo American share price has reflected the Cyril Ramaphosa feel good factor. But, Ramaphosa has much work to do to re-energise the all-important mining sector, which has shed thousands of jobs. The contribution of mining to the country’s Gross Domestic Product is far lower than it was in the dark days of apartheid. Part of the problem stems in black economic empowerment legislation, which has benefited an elite. The Financial Times, a respected London-based global newspaper, suggests that Ramaphosa should prioritise rejigging the country’s newish mining charter as a step towards re-energising a stagnant sector. - Jackie Cameron

By Thulasizwe Sithole

South Africa’s mining industry is a key pillar of the economy, but it has been in steady decline for more than a decade. Cyril Ramaphosa can re-energise the sector by rejigging the mining charter.

That’s the belief of international analysts who are watching events closely as Zuma reaches the end of his tenure and business-friendly Ramaphosa gets set to take over as South African president.

Financial Times columnist Lex notes that mining’s contribution to Gross Domestic Product comes in at about 8% - less than half of its 1980 level. “Employment has fallen correspondingly,” opines the FT, adding that most of this drop occurred before Zuma became president.

Steps Ramaphosa could take to lift the mining sector include a compromise on black empowerment ownership levels.
A truck carries newly excavated kimberlite rock out of the open pit at the Voorspoed diamond mine, operated by De Beers SA, in Kroonstad, South Africa. Photographer: Waldo Swiegers/Bloomberg

A change that has been mooted but not yet implemented is an increase in the stake black South Africans hold in each mining project to 30% - a move that lends itself to the risk of the entry of more politically connected individuals in the sector.

A less aggressive mining charter that shares gains across communities rather than an elite is preferable, is the message from Lex.

Although the rand has risen in value since Ramaphosa became ANC leader, he will have to do a lot of work to maintain the momentum.

“A slack in the economy will damp the impact. The country’s output gap, a measure of how far away economic growth is from its potential, wallows at a negative 4 percent, says Goldman Sachs. Emerging markets together have a negative gap of half a per cent,” comments Lex.

Big mining companies are as complicit as the ANC in the failures of BEE. “They have as much to gain from creating a better system,” adds the columnist.