Stay abreast of COVID-19 information and developments here
Provided by the South African National Department of Health
Mining compact needed
to ensure sustainable industry
Sanlam Private Wealth
Jan 25, 2017
The opening lines of the Zambezi Protocol – drawn up in April last year at a meeting in Zimbabwe convened by the Brenthurst Foundation, under the auspices of former Nigerian President Olusegun Obasanjo – read as follows: ‘Africa’s mining sector is in crisis. At its root is a lack of trust between mining companies, governments and indeed, the very nations they lead. A failure to tackle the crisis will result in serious, adverse implications for both economic growth and employment prospects at the moment when the continent’s needs are rapidly increasing.’
At its heart, the Zambezi Protocol sets out a template for Africa to realise optimal value from its vast mineral wealth based on a foundation of trust and more constructive partnerships. It challenges us all to develop a vision of what a sustainable, successful mining industry should look like across the continent. It also challenges us to do a great deal of honest introspection.
What are the factors currently inhibiting the potential of the South African mining industry? According to the 2015 Fraser Institute survey on mining and exploration companies, South Africa ranked 65th out of 109 mining jurisdictions with regard to overall investment attractiveness. Factors that contributed to this relatively poor ranking included regulatory uncertainty, labour relations and militancy – a factor that’s widely recognised as a significant impediment to productivity and promotion of investment, and the development of community conditions.
From my personal interactions with investors, these factors are considered among the most critical for business to operate effectively, to invest capital with confidence in a sustainable future and to contribute to a value-generating role in society.
I would like to suggest a three-stage ‘roadmap’ to turn around the South African mining industry and ensure it realises its full potential for all its stakeholders:
We need to acknowledge our past.
The South African mining industry was a flywheel in the development of the South African economy. Joburg – or Egoli – was founded on a base of mining, as was much of our country’s infrastructural development, financial services and industrial sectors. The industry has played, and continues to play, a significant role in our national and regional economies.Can we honestly say, however, that the mining industry did the best it could for all stakeholders and that it acted humanely and morally? I for one must acknowledge that it did not. The negative impacts of the mining industry – from migrant labour that impoverished rural areas by forcing men off the land and accommodating them in single-sex, barrack-style hostels, to job reservation and the lack of opportunity for women and people of colour – are still felt today.We need to critically and honestly acknowledge the role of the mining industry where it acted against the interests of the vast majority of South Africans if we wish to secure full reconciliation with our broader society. Our legacy of mistrust and polarisation is a predominant factor that prevents stakeholders from working together for mutual benefit.
We need to agree on a vision for the mining industry.
The African Mining Vision, adopted at the February 2009 African Union summit, states that Africa needs to ‘shift its focus from simply mineral extraction to much broader developmental imperatives in which mineral policy integrates with development policy’. What this means in practice is using our country’s vast mineral resources as a catalyst for development, so that the mining industry can play a transformative role. To do this we need to integrate mining into development policies at all levels of society.
We need to develop a social and economic compact – between business, government and labour – that creates superior value for all stakeholders.
Business will need to commit to open and transparent disclosure of information as the basis for meaningful engagement with all stakeholders. More importantly, business will have to ensure that value flows equitably to all stakeholders according to an agreed and specific framework, including employee benefits, profit sharing, taxes, social expenditure and dividends to shareholders. Commitments to invest in growth projects and sustainability in the right investment climate will be a necessity.While we recognise that unions have an important historical role in promoting a political agenda, the unions of the future should see their role as serving their members’ interests first. They need to engage proactively around the sustainability of mining operations, and industrial action that could compromise the business should be avoided. Unions should be more supportive of measures that enhance business performance, and critical and possibly difficult business decisions required in the interests of sustainability should be supported.
Government will need to provide clear policy and a regulatory framework that provides the level of certainty that is required for confident investment in mining projects. Increased incentives for investment in mining growth projects and a fair taxation regime will promote investment, from industry as well as from local and foreign investors.
Can such a future for the South African mining industry realistically come about, or is it a utopian dream? I believe most would agree that this would be a far more preferable way for the industry to function than through the adversarial and hostile interactions that are commonplace in our current climate and which only serve to destroy value.
This ambitious vision can be realised through a renewed collective will and rebooted relationships that are not contaminated with historical perceptions and legacies. We’re unlikely to be looking at a ‘big bang’ scenario, however – a transformed mining industry will more likely be the result of incremental progress over time.
What is crucial is that all stakeholders need to be aligned with contributing towards the industry’s success instead of trying to further their own self-interest. Ultimately all South Africans have an interest in creating an environment in which the mining industry fulfils its potential in building a stronger nation. All stakeholders – whether business, government or labour – need to make it their first priority to collectively protect the industry’s sustainability as the source of the value that will accrue to all South Africans.
Sanlam Private Wealth manages a comprehensive range of multi-asset (balanced) and equity portfolios across different risk categories.
Our team of world-class professionals can design a personalised offshore investment strategy to help diversify your portfolio.
Our customised Shariah portfolios combine our investment expertise with the wisdom of an independent Shariah board comprising senior Ulama.
We collaborate with third-party providers to offer collective investments, private equity, hedge funds and structured products.
are they a good investment?
The great lockdown:
one year on
Head of Equities
IHG: focus on
quality pays off
Sanlam Active UK Fund
BUDGET 2021: THE RIGHT INTENT,
BUT RISKS ABOUND
Investment Economist at Sanlam Investments
INVESTING IN 2021:
WHAT TO EXPECT
Sanlam Private Wealth
MINING: IS THE
THROUGH THE HYPE
Head of Equities
Jack is back – business
as usual for Alibaba?
Global Equity Analyst, Sanlam UK
South AfricaSouth Africa Home Sanlam Investments Sanlam Private Wealth Glacier by Sanlam Sanlam BlueStar
Rest of AfricaSanlam Namibia Sanlam Mozambique Sanlam Tanzania Sanlam Uganda Sanlam Swaziland Sanlam Kenya Sanlam Zambia Sanlam Private Wealth Mauritius
GlobalGlobal Investment Solutions
Sanlam Private Wealth (Pty) Ltd, registration number 2000/023234/07, is a licensed Financial Services Provider (FSP 37473), a registered Credit Provider (NCRCP1867) and a member of the Johannesburg Stock Exchange (‘SPW’).
All reasonable steps have been taken to ensure that the information on this website is accurate. The information does not constitute financial advice as contemplated in terms of FAIS. Professional financial advice should always be sought before making an investment decision.
Participation in Sanlam Private Wealth Portfolios is a medium to long-term investment. The value of portfolios is subject to fluctuation and past performance is not a guide to future performance. Calculations are based on a lump sum investment with gross income reinvested on the ex-dividend date. The net of fee calculation assumes a 1.15% annual management charge and total trading costs of 1% (both inclusive of VAT) on the actual portfolio turnover. Actual investment performance will differ based on the fees applicable, the actual investment date and the date of reinvestment of income. A schedule of fees and maximum commissions is available upon request.
COLLECTIVE INVESTMENT SCHEMES
The Sanlam Group is a full member of the Association for Savings and Investment SA. Collective investment schemes are generally medium to long-term investments. Past performance is not a guide to future performance, and the value of investments / units / unit trusts may go down as well as up. A schedule of fees and charges and maximum commissions is available on request from the manager, Sanlam Collective Investments (RF) Pty Ltd, a registered and approved manager in collective investment schemes in securities (‘Manager’).
Collective investments are traded at ruling prices and can engage in borrowing and scrip lending. The manager does not provide any guarantee either with respect to the capital or the return of a portfolio. Collective investments are calculated on a net asset value basis, which is the total market value of all assets in a portfolio including any income accruals and less any deductible expenses such as audit fees, brokerage and service fees. Actual investment performance of a portfolio and an investor will differ depending on the initial fees applicable, the actual investment date, date of reinvestment of income and dividend withholding tax. Forward pricing is used.
The performance of portfolios depend on the underlying assets and variable market factors. Performance is based on NAV to NAV calculations with income reinvestments done on the ex-dividend date. Portfolios may invest in other unit trusts which levy their own fees and may result is a higher fee structure for Sanlam Private Wealth’s portfolios.
All portfolio options presented are approved collective investment schemes in terms of Collective Investment Schemes Control Act, No. 45 of 2002. Funds may from time to time invest in foreign countries and may have risks regarding liquidity, the repatriation of funds, political and macroeconomic situations, foreign exchange, tax, settlement, and the availability of information. The manager may close any portfolio to new investors in order to ensure efficient management according to applicable mandates.
The management of portfolios may be outsourced to financial services providers authorised in terms of FAIS.
TREATING CUSTOMERS FAIRLY (TCF)
As a business, Sanlam Private Wealth is committed to the principles of TCF, practicing a specific business philosophy that is based on client-centricity and treating customers fairly. Clients can be confident that TCF is central to what Sanlam Private Wealth does and can be reassured that Sanlam Private Wealth has a holistic wealth management product offering that is tailored to clients’ needs, and service that is of a professional standard.