MINING companies increasingly took a leadership position in the industry after the government failed to play this role, Sibanye Gold CEO Neal Froneman said at the Joburg Indaba mining conference on Wednesday.
The industry is headed for an intense discussion next month in a government-led initiative called Mining Phakisa, involving all stakeholders, to identify and unblock bottlenecks preventing investment in the sector and stifling growth.
There was a real concern that the event would be just another talk shop, with no tangible outcomes, Mr Froneman said.
“Hopefully we’re wrong and there will be real outputs and real solutions,” he said.
But there was a real lack of leadership in the sector, he said.
“We looked to the government to lead the industry forward and it doesn’t come. It’s certainly not going to come from the unions and associations. In my mind, we’ve had to step up to the plate.”
The mining industry was caught off guard by the removal of Ngoako Ramatlhodi as mineral resources minister last month in a Cabinet shuffle by President Jacob Zuma.
The appointment of the little-known Mosebenzi Zwane undid 18 months of hard work by mining companies in building a relationship with Mr Ramatlhodi at a difficult time, in which thousands of workers are facing retrenchment as commodity prices have slumped and input costs have soared.
Sandy McGregor, an Allan Gray portfolio manager, said any recovery in commodity prices was a long way off and, based on his long experience in commodities, the cycle was only now entering its second phase that entailed companies restructuring, cutting production and, in some cases, going into bankruptcy.
The first stage entailed demand falling below supply, precipitating a collapse in prices. The next stage saw lower output, falling inventories and a recovery in prices.
“We’ve got quite a way to get to that stage,” Mr McGregor said.
The enormous demand for commodities from China to feed its rapidly growing economy, which has begun slowing down, was “behind us to a large extent” and would not be repeated, he said, adding that the downturn would be longer rather than shorter.
Mining companies had also entered the downturn with balance sheets more heavily debt-laden than before.
BDLive
