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Johannesburg – Loss-making mines are limited in what they can invest to drive development, Lonmin Chief Executive Ben Magara has stated.
Magara was speaking at the Business Day Breakfast Dialogue to commemorate the fifth anniversary of the Marikana massacre.
At the same time Joseph Mathunjwa, President of the Association of Mineworkers and Construction Union (AMCU) appealed to miners and other local investors to pour capital into the country in order to develop industries and ultimately stimulate job creation.
But Magara said that viable and thriving businesses are needed to drive transformation.
“Without a profitable business, we cannot have money to invest in anything,” he said. Stakeholders, including government and unions, must realise it is in their interests that businesses are thriving, he pointed out. Similarly, all stakeholders should be concerned that whatever growth is being achieved is inclusive and that communities are benefitting from it.
The CEO said that while the industry was moving towards its transformation goal and still had some way to go, no single business, union or municipality could achieve transformation on its own.
Magara also unpacked the challenges mines were facing such as lower platinum process, a stronger rand and inflated costs. He said these factors, coupled with the effects of the global financial crisis impacts the viability of the sector.
“We cannot spend what we do not have,” said Magara. About 70% of the platinum industry is loss-making. “We pay customers to have our metal, it is not sustainable,” he said.
But Mathunjwa pointed that although economic conditions have added pressures to mines, structural changes need to be introduced. “Even though the incoming government has a chance to transform the economy, they chose to embrace the structural economic system used by the previous regime,” he said.
Mathunjwa criticised companies, namely Sibanye and AngloGold Ashanti for shifting investments to the US.
“They are talking about the risk in South Africa. Why continue owning mines if the risk is high?” Mathunjwa said mining companies were still making money. Businesses won’t remain in an area where they are not making money, he added.
There is a lack of loyalty in private capital, the State should rethink its role in the economy. If wealth was in the hands of the State, then the country would not be a victim of capital flight. Proceeds would be given to the State for reinvestment in the country, he said.
AMCU wants to see wage-led growth where workers have decent jobs and earn decent wages to spend money that stimulates the economy. He also called for the small and medium enterprise sector to be regulated to make it accessible to “ordinary people”.
Mathunjwa said that economic growth also depends on the education system, which needs to be responsive to the labour market.
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