ANC chasing important companies out of South Africa

South African mining companies have been chased out of the country by the ANC’s economic policies and its close alliance with major trade unions. 

Many of these companies, including Anglo American, have steadily reduced their exposure to the country amid increasingly onerous regulations, poor labour relations, and destructive policies. 

Worryingly, the party, which is still the dominant political force in South Africa, appears to be doubling down on these policies, regulations, and tightening its relationship with labour. 

This is preventing mining companies from expanding their operations in South Africa, investing in new mines, and attracting new players. 

Amidst a commodity boom, South Africa should be receiving billions in investment to develop its mineral resources. Instead, exploration spending in the country is only R781 million – a fraction of the 2006 peak of R6.2 billion.

Modern Corporate Solutions mining analyst Peter Major said he heard more negative stories about South Africa than positive at the recent Africa Mining Indaba. 

“Unfortunately, all the people I chatted to had more negative stories about South Africa than positive,” Major told BizNews. 

“This was mainly about licences, on community disruptions, and on Black Economic Empowerment. There were many more negative stories on South African mining than positive.”

“The only positive was, ‘Thank heavens there is no load-shedding’. There is also a little positive story with reduced tariffs for ferro-alloy smelters.” 

Major said there are positive noises from the government, particularly regarding listening to the industry and finding a solution. 

However, this has been the case for over a decade, with no solution being implemented that will meaningfully improve operating in South Africa. 

“Glencore pointed out that the government’s really trying, and they are talking to us. But it is still talking. Behind the scenes, the companies are desperate for action,” Major said. 

Major pointed to talks between Eskom and Mozambique to find an agreement to supply electricity to South32’s Mozal smelter. 

“South32 said that once that closes, it will not reopen. Glencore told us that if their furnaces close, they will not reopen,” Major said. 

“Almost all the furnaces that have closed in this country will never open again. Never. Impossible economically to even think of reopening those furnaces.” 

Government not taking responsibility

Major said the government has failed to take responsibility for the downward spiral that South African mining finds itself in, with output flat for the past 20 years and exploration investment a fraction of what it once was. 

The government remains committed to policies that have seen South Africa fall from one of the best jurisdictions in which to operate a mine to one of the worst, according to the Fraser Institute. 

“So, no. Government has not got the message that they are the people most responsible for mining going down in South Africa and the lack of investment in it,” Major said. 

“If they have got that message, then hopefully they would do something about it.” 

Major said the current government, with the ANC being the dominant power, has not shown an ability to change course or listen to industry when things are not working. 

“I didn’t pick up any chance of change. I might not be the best barometer. I am one guy. I spread myself thin. I try to be unbiased, but no, I did not pick up any chance of change,” Major said. 

“And it is unlikely to change because this government has shown us for the last 25 years, since they introduced the Mineral and Petroleum Resources Development Act (MPRDA) in 2002.”

“It is only going to go one way, and that is down in the rut. Each time they introduce another version of the MPRDA, it is more punitive than the last one.”

Major previously explained that Anglo American was one of the first victims of the ANC’s mining policies, with South Africa’s most iconic company being chased out of the country. 

He compared this to going back to an old girlfriend you separated from under bad circumstances and trying to make up for it decades later. 

“We are talking decades later. Anglo effectively left this country in 1999. I think the claws were out for them along with the grinders and the hacksaws,” Major said. 

“The unions and the ANC said in the 1980s what they were going to do to Anglo when they came to power. They put the fear of God into everybody related to Anglo, including investors, and so when they had the chance to leave in 1999, they took it.” 

Major recalled that Harry Oppenheimer was actually the one person who fought the hardest against Anglo moving to London, as he was adamant that it was a South African company. 

“But Harry could not win over the executives, and I give them credit, they read the situation pretty well, having seen what happened before in Zambia, Uganda, and Zimbabwe when mines were nationalised,” Major said.