AUSTRALIAN miners wanting to do business in South Africa have been advised to accept responsibility for the country’s development if they intend to continue operating there.
Speaking at the Africa Downunder conference in August, South African Mineral Resources minister Susan Shabangu told delegates it was important for mining companies to optimise “social
capital by ensuring that we grow the industry in a socially and environmentally responsible manner”.
This year’s commodity-wide price drop has caused many investors to abandon the resources industry, making operations even harder for the many Australian companies pursuing opportunities in Africa. While in the past the lure of lower costs and higher returns had attracted investors to parts of the continent still considered risky, Ms Shabangu said it was time for investors to approach the situation differently.
“The mining and minerals industry is pivotal in the structure of our economy and has a significant multiplier effect on the economy through its linkages with other sectors,” she said.
“If investment is not going to improve the quality of lives…it will not be able to bring stability in South Africa.” Ms Shabangu called upon the investment community to “moderate their return expectations” in order to partner with South Africa and “balance exploitation of opportunities presented by mineral resources with [the] crucial socio-economic development needed to secure long term stability and preservation of investment in the continent”.
“It is essential that investments in Africa bear clearly discernible benefits to our shores,” she said.
Media reports have claimed that Ms Shabangu’s comments were not welcomed by investors, as they reinforced a common belief that African projects were both hard work and high risk.
However the balance between attracting investment and developing the country is not a new challenge for Africa. With South Africa soon to celebrate its 20th anniversary of democracy, Ms Shabangu said the government had put in place a massive infrastructure program prioritising mining and minerals development requirements.
“The fiscal incentives present an opportunity for a rapid growth and investment in research and development for the country’s mining industry, including exploration,” she said.
“The development of the mineral beneficiation policy presents new and ‘game-changing’ investment opportunities.” Ms Shabangu also spoke of her support for the Public Investment Corporation’s vote against pay increases for mining company chief executives at annual general meetings held recently.
Although she didn’t name him specifically, media reports suggested her comments were largely aimed at Gold Fields chief executive Nick Holland, who in 2012 earned 45.3 million South African Rand (compared to R32.7 million in 2011) despite the company experiencing a 19 per cent drop in attributable earnings and a 30 per cent decline in production during the same period.
“South Africa has one of the world’s largest pay differentials, with chief executives being paid about 40 times the average salary of staff,” she said.
“This behaviour perpetuates inequality and threatens the stability needed for long term development of the industry.”
Speaking to media following his presentation at the conference, Mr Holland said his pay had been determined by the group’s board of directors and remuneration committee, and a breakdown was included in the company’s annual report.