Fin24

'Dark days' loom for SA mining

2012-10-21 10:19

Johannesburg - International financial services firm JPMorgan Cazenove this week warned its clients that the unrest and sporadic strikes in South Africa’s mining industry could continue for at least another six to 12 months.

It said a “positive bias” towards the prospects of the sector was difficult to justify.

In a document titled “Dark days indeed for the mining industry”, the firm’s research division said its conclusion was drawn from the view that factionalism within the governing tripartite alliance wouldn’t be resolved once the contest for the leadership of the ANC was resolved in December.

“As such, there is a view that the ability of the state to suppress future strike and community protest activity is limited,” the report read. In addition, the threat of large-scale dismissals by groups such as Anglo American Platinum was seen as a significant risk not only to the industry, but South Africa in general. 

“If Amplats fired workers, South Africa could be headed for a revolution and that broader social unrest would be mobilised on the back of dismissals,” it quoted an official of the National Union of Metalworkers of SA as saying.

UK-based JPMorgan Cazenove is a major international investment advisory firm and represents almost a third of the top 100 listed companies on the London Stock Exchange, according to a survey done by Morningstar in the second quarter of 2012.

The report was compiled by James Wellstead, a former executive manager at Tokyo Sexwale’s Mvela Resources, who now works as a metals and mining analyst for JPMorgan. Wellstead said he came to his findings after meeting with mining company representatives, labour consultants, unions and the Chamber of Mines.

“The general tone was gloomy, with the feeling that the unrest is driven by larger SA-specific issues,” it read. “As such, there is concern that problems may continue beyond the ANC conference in Mangaung in December, which is likely to be negative for mining equities and investment in South Africa in general, in our opinion.

“Until greater clarity emerges, whether by the actions (and resulting consequences) of the mining companies, government or unions/labour, a positive bias to the South African mining sector is difficult to justify.”

The National Union of Mineworkers (NUM), when asked whether it concurred with the view that the strikes could take up to a year to be resolved, said it concurred that some of the social issues underpinning workers’ grievances would take some 
time to be addressed.

“The strike may go away, but you still have serious complexities in Rustenburg, for instance,” said NUM spokesperson Lesiba Seshoka. 

“At the end of the day though, they (workers) will have to provide for their families. They are running out of cash and Christmas is around the corner.

“I personally think it can’t take that long.”

Political analyst Daniel Silke also agreed with the view that the strikes were a reflection of social and political discontent, but warned these issues won’t be easily overcome.

“The intensity of the strikes will wax and wane as fatigue from both sides (employers and workers) sets in, but will not go away for a long time as the larger issues of inequality and political dissatisfaction are not addressed,” Silke said.

JPMorgan’s note was the umpteenth example of an established player in Western markets expressing concern over a deterioration in South Africa’s investment climate, and came hot on the heels of Standard & Poor’s (S&P) decision to lower the country’s long-term foreign currency sovereign credit rating from BBB+ to BBB. 

The ongoing strikes within the mining sector was cited as one of the major reasons for S&P’s decision.

Similarly, influential financial weekly The Economist this week carried a front-page story named “Cry, the beloved country”, with “South Africa’s sad decline” as a subtitle, in which it described South Africa as sliding downhill while much of the rest of Africa was on its way up.

On a more positive note, JPMorgan said there was a sense that the Marikana tragedy had brought a renewed focus on some of the social and labour issues facing mining communities, and that there appeared to be a renewed commitment to addressing some of them.

In addition, another outcome could be a leaner, more profitable platinum industry, although this would result in more job losses. 

Comments
  • kobus.hattingh.5 - 2012-10-21 10:37

    All thanks to the likes of Zuma, Vavi, Malema and their fellow ANC compatriates! :(

      claudia.meads - 2012-10-21 11:56

      There are at least TWO issues perpetually being missed: 1. The wave of strikes in SA are NOT a random event. It is a carefully planned and as such constructive happening. While there is undoubtedly an element of political opportunism, it cannot be confused for a the deliberate construct of the events, currently playing out in SA. SA is under de facto attack on its sovereignty from (inter alia) Zimbabwe and Nigeria. The ANC is insidiously playing victim and perpetrator at the same time. It knows it has no legal grounds to substantiate nationalization (the code-word for STEALING) and the only means is to let the country collapse into a Zim-styled collapse. Reminder: the long-term well-being of SA is the furthest from the current ANC elite's minds - as with Mad-Bob, all they want, is the wealth of a small dynasty. Kindly note the fact that the ANC will talk a lot, but will take little decisive action - eg there will all kinds of 'action-plans', but little tangible ACTION. 2. The ANC - via STATS-SA lies about SA's inflation rate. SA's de facto inflation rate ranges from at least 15% to 25% (depending on the lifestyle). The poor (the working poor or those parasiting on welfare) are the most vulnerable - around the middle of the year (note - the strikes started in Aug) their income has become woefully inadequate, despite no change in their lifestyle. The ANC needs this inflation mirage to create a perception that it can govern a country.

      colin.dovey - 2012-10-21 12:20

      Actually, it is all very simple: - the ANC has had enough time now to demonstrate that they cannot govern on behalf of the people. What exacerbates this is that they are also hugely incompetent, sickenly greedy, and frightenly corrupt.

  • sazi.radebe - 2012-10-21 10:56

    So saddening to see such a beautiful country going down the drain all because of a few bunch of incompetent individuals.....time to pack and leave

      colin.dovey - 2012-10-21 12:22

      We don't need to pack and leave...this is OUR Country, and we must VOTE them out!

  • liamkie - 2012-10-21 11:10

    Always wanted to move back to South Africa..but by the looks of things I'll be staying right here in good old strong and secure Germany..

      shane.asselbergs - 2012-10-21 11:52

      There's nothing a South African likes more than to advertise that they live overseas. Good luck paying for all that Euro debt which half the countries will probably default on eventually anyway. You should have moved to Singapore; Europe's time has come and gone.

  • hitting.thefan - 2012-10-21 11:18

    The only difference between what condition we have and other countries have is the apartheid history. The social structures are the same in most countries. You have a small number having riches and the large numbers in middle and lower income. In S.A. everybody wants to be rich. It does not work like that. I think that until these strikers gets hit up the head with the world norm they will have this pipe dream of everybody earning in the tens of thousands a month.Funny enough they earn more then the majority of the public and if that is not enough what is. I only pray that there stupidity does not effect me. Government should have stepped in and made there masses understand reality!

  • FUNKMASTERFLEX.AKA.BAIN - 2012-10-21 11:20

    Nothing new in this article,this is the african way which is so sad especially when you meet such competent people of all races in SA but we are left with a president that only job is to read speeches he does not understand and basically spew propoganda

  • john.morreira.9 - 2012-10-21 11:23

    From whats happening,it would appear that the 61% were deluded.

  • tshimomola.kenneth - 2012-10-21 11:38

    Liamkie stay in Germany and wait for what Greece (tip of an icebag) fully erupt. Sazi, were would you go? Anyway my point is the more people who are literate enough to vote ANC pack and leave the chances are they will retain power. Next election we bring this change ourselves, wr campaign for change and we strive to make that constitution the value of its worth. The blood shad by the ANC and the Apartheid government is worthy of fighting for a just democracy.

  • shane.asselbergs - 2012-10-21 11:41

    Perhaps if the NP government had made the correct choices all those many years ago, we would likely not be complaining about our leaders and citizens making the wrong decisions now. There are consequences for everything.

      johan.wilsnach - 2012-10-21 23:11

      I have worked with many illiterate uneducated people in industry and let me tell you they were not corrupt or anything. Instead I have found them to be hardworking honest men who had more integrity than the directors in the business. Education has nothing to do with corruption or any other related crimes. You are a scumbag by choice and if you cannot accept ownership for this then you are a dum scumbag on top of all things.

  • thatoadam.ndlovu - 2012-10-21 11:54

    If you cannnot beat them, join them and for me I think its time to pack my things and leave all this mess.

  • wmutahi - 2012-10-21 12:52

    don't buy the economist don't buy - when r we going to hit the stage again?

  • KennySven - 2012-10-21 13:15

    Who does one blame ZOOMER and his corrupt cANCer government or Zille? Look at the picture above to try to understand the problem. The missing link is alive and well living in Africa

  • mandla.thwala.10 - 2012-10-21 13:22

    One Zulu wise man once said \The inheritence of the stupid peaple will be inheritted by the wise\ Now that peaple have realised that they are being robbed,the wise are downgrading them

  • tony.naidoo - 2012-10-21 13:42

    Dark days for mining? Nah, dark days for SA and all suffering Safricans. We may just get by, by feeding off the scraps of the cANCer leadership and their cohorts. Better still, we can vote to change OUR lives. Vote with your head!

  • catherine.l.vanzyl - 2012-10-21 17:37

    we don’t have a reliable government we only have a reliable PUBLIC PROTECTOR our new government SUPPORT now our new government the PUBLIC PROTECTOR

      lacrimose.wolf - 2012-10-21 18:12

      If we had a reliable government we wouldn't need a Public Protector.

  • johan.wilsnach - 2012-10-21 22:55

    All the systems, AA and BEE and changes in the labour laws they have made is now seriously backfiring. So what is the next step?? And where are you going??? Or are you going to run away??? You see anc alliance it is not that easy to run a country!!Million dollar question is,,,When are you going to admit that you cannot run this country??? When you have done enough damage???? Or helped yourselves well enough????

  • ike.jakson - 2012-10-22 02:31

    Darker days than we may be able to cope with.

  • martin.manzini - 2012-10-25 16:17

    It is a season, for in everything there is a season and it will pass.All I know is that in tyms of dificulties is where we see real Sout Africans. U can't say that if u have challenges leave ur family/devorce ur wife face it and deal with it. Let me remind u, this is our country and it is in our ability to create a free society, A change begins with u, Just be honest with ur self. I am a proudly South African for ever!!!!!!!

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