Further comments on the new mining strategy
Original publish date – Fri, 02 Jul 2010 08:20:46 +0000, Keith
I still feel that the new mining transformation strategy falls short of broad-based aspects. They don’t emphasise all the other elements sufficiently, and there are still too few objective measurements.
They do concentrate ownership – the target is for 26% of the mining industry to be in black hands by 2014. This is not unreasonable. When analysing targets I always look at demographics, and the facts remain that whites make up 10-15% of our population. The target for mining is for 74% ownership of mining assets to be in white hands, because only 26% is to be in black hands.
Look at it again: The policy is for 10% of the population to hold 74% of mining assets in the country. If there can be a criticism of the new policy many will say that this is far too generous. The policy is for 85% of the population to hold 26% of assets. So, from the viewpoint of a member of the population in the privileged group, i.e. one who is part of the 15% and is expected to hold ownership rights of 74%, this is extremely generous. From the viewpoint of a member of the population in the non-privileged group, i.e. one who is part of the 85% and is expected to hold ownership rights of 26%, this does not go nearly far enough.
The saddest part of all is that the non-privileged group has so far not come close to achieving those targets – ie. 26%. It will be a huge strain to achieve that targets by 2014, which is why the targets are not far higher, as many would expect.
Question to ask: Why has it been so difficult to reach targets? How can we ensure that targets for 2014 will be reached?
Some of the answers are self-evident: The owners of mining assets are those that have historically owned mining assets: 10-20-50-100 years ago mining houses were dominated by white families, and those families remain shareholders in mining assets today. Mining requires a lot of money – one cannot start a mine with little finance, and a spade. It only works only on huge economies of scale. Unfortunately, the non-privileged group has also traditionally had no access to finance, and with a low disposable income stills struggles to raise finance.
To even reach the 26% target will be very difficult due to lack of finance, or the knowledge and track record of knowing how to raise
There are of course huge opportunities for the privileged group, and anyone who has access to finance.