The world is changing fast and to keep up you need local knowledge with global context.
JOHANNESBURG — Both the Guptas and Mineral Resources Minister Mosebenzi Zwane seem to both sing from the same Bell Pottinger inspired hymn sheet. When questioned in Parliament about how and why he pushed for Oakbay and Guptas to bully their way through and ultimately take ownership (in a hugely controversial way) of Glencore’s Optimum coal mine; Zwane said the deal arose out of the need to ‘save jobs’. In an interview with the BBC, Duduzane Zuma, son of the President, said exactly the same thing. When Oakbay recently in August announced that it’s selling its Tegeta mining business (under which Optimum falls) to ‘save jobs’. But what these deals have done, instead, is contribute towards a lack of confidence in the industry and the massive threat of job-shedding. David Christianson explains… – Gareth van Zyl
By David Christianson*
Good governance is the way to save jobs in mining.
So now you know. The purpose of the state capture project in the mining industry is to save jobs. At least that’s what mineral resources minister Mosebenzi Zwane implied in Parliament last week. This will come as a surprise to those who think that good governance, investor certainty and a much-reformed enabling environment are needed and that State capture is inimical to these virtues.
In the course of a surly and aggressive account to Parliament’s portfolio committee on mineral resources, Zwane argued that he ‘mediated a process’ between Swiss-based multinational Glencore, the owner of Optimum Coal, and Gupta-owned Tegeta, to save jobs. ‘One of the problems when I (was appointed) was that about 85,000 workers in the mine would possibly lose their jobs’, he said. That Optimum only faced possible closure as a result of bullying by the Gupta’s friends at Eskom – detailed in the Public Protector’s Report on State capture – went unremarked.
Where the figure of 85,000 jobs comes from is equally obscure. Optimum employs 7,500 people, the Gupta’s Oakbay employs 8,000 people, the Chamber of Mines says the sector has shed 80,000 jobs since 2012. Take your pick, divide by your age and multiply by the number of years you think President Zuma will continue to evade his day in court. That’s what Zwane seems to have done.
But when the minister links State capture – the subject of the portfolio committee’s hearing – to ‘saving jobs’, he’s right on message. When Oakbay announced it was selling Tegeta Resources to an obscure and minimally capitalised Swiss fashion company in August, the company said the purpose was ‘to preserve jobs, provide certainty to over 7,500 hard-working employees throughout the group and to safeguard the inherent value of the businesses in which they work’. Strangely enough, everyone else thought the Guptas were simply moving their loot offshore.
In much the same vein, Oakbay CEO Nazeem Howa, in the company’s 2016 annual report, told us that the company had ‘two goals’; ‘profit and job creation, which (it) believe(s) are equally important.’
Oakbay is not the only element of the Gupta empire which claims to be hellbent on protecting jobs in the face of an evil onslaught from everyone else. President Zuma’s son, Duduzane, in a BBC interview two months ago, told the world: ‘We are left no choice but to sell. We are selling purely because we want to protect the odd 7,000 jobs of our people and people who have been loyal to us’.
Taken at face value, such sentiments could not seem more laudable.
Of course, not everyone sees the matter in quite the same way. In fact, it seems that no one other than the State capture gang has the audacity to punt the ‘jobs protection’ line. The National Union of Mineworkers says it has no relationship with Minister Zwane, that he is ‘the worst minister since the dawn of democracy’ and that he should be fired. A NUM spokesperson has argued that ‘the fight to save jobs has not been made easy by (minister) Zwane. ‘One just does not know what else the minister will say tomorrow that will further destabilise the industry. The future is bleak’, he said.
The Chamber of Mines argues that the implementation of Zwane’s latest venture, the Third iteration of the Mining Charter, would cost 100 000 jobs. But even with the Charter currently in suspension, the industry continues to bleed jobs. All of 23 500 job cuts have been announced in South Africa’s precious metals mines in the second half of this year. With these retrenchments, total employment in gold mining could fall to under 100 000 by the end of this year, the lowest figure in over 100 years.
The minister’s hypocrisy and that of his State-capture friends is breathtaking. No lie or evasion is too shameful. Everyone – including the minister and the Guptas – knows that the State capture project is the obstacle which forestalls any progress on the real issues which bedevil South African mining. We need a basic legal framework in the form of a realistic Mineral and Petroleum Resources Development Act, regulations that reward honest effort and penalise rent-seeking, and above all an administration that does not take sides when it comes to deals but instead maintains a fair playing field. These are the conditions needed if the mining industry is to create jobs again.
The enabling environment for mining investment can still be salvaged. But it is impossible to see a role in the process for anyone who tells us they are saving jobs when they are doing the opposite.
- David Christianson is a former academic, banker and financial journalist. He was African Business Journalist of the Year in 2006. He currently consults in a number of development fields in sub-Saharan Africa including regulation, local economic development, small business and business linkages. He is a former Council member and currently consultant to the IRR.
Cyril Ramaphosa: The Audio Biography
Listen to the story of Cyril Ramaphosa's rise to presidential power, narrated by our very own Alec Hogg.