Here’s why SA’s largest mining house is looking for greener pastures

Image supplied by Sibanye Stillwater

As the annual Mining Indaba, the African continent’s premier gathering for the mining industry, kicked off in Cape Town this week, top SA mining executive Neal Froneman was echoing a warning issued last year that he would rather invest in West Africa, Australia or the Americas due to a lack of local growth opportunities.

Froneman, who is the long-serving CEO of Sibanye-Stillwater, said poor economic growth, excessive government debt and the possible loss of the Moody’s investment-grade credit rating made doing business in South Africa increasingly risky.

Sibanye-Stillwater is the world’s largest primary producer of platinum, the second largest primary producer of palladium and the third largest producer of gold, as well as a significant producer of rhodium.

South Africa’s economy has gone backward

“There has been a distinct lack of turnaround; if anything we have gone backward,” Froneman said in an interview with Bloomberg. “To be clear and blunt, he (President Cyril Ramaphosa) also hasn’t made some of the difficult decisions and we are hurtling into a debt trap.”

He urged the government to act in the interests of the country and not to pander to ANC factions.

Froneman said if the company did not see growth opportunities in the country it would need to look elsewhere. This would also impact employment prospects, as Sibanye-Stillwater is SA’s largest private sector employer.

In a separate interview with the Daily Maverick, he noted that while mining companies want to generate their own power, Eskom needed to be repaired as well. “We have to make Eskom work. Business and Eskom are joined at the hip; if Eskom fails we are all going to fail,” Froneman stated.

President Ramaphosa may be running out of time

The comments highlight the reality that President Ramaphosa and his government may be running out if time to introduce the necessary reforms required to reinvigorate the South African mining sector, which is battling a range of challenges ranging from power shortages to regulatory uncertainty. 

Speaking at a media round table in November last year, the Sibanye-Stillwater CEO also emphasised the he believed critical issues were not being addressed, both within the mining sector and the economy in general.

Land expropriation and mining charter are not business friendly

“You can’t use the word ‘expropriation’ in the same sentence as ‘business friendly’,” he said, referring to a push from within the ANC to amend the constitution to allow for expropriation of land without compensation.

He also criticised the Labour Relations Act as being outdated and inefficient, and said the latest iteration of the mining charter, while improved, was still not sufficiently business friendly.

In a statement released in late January, Moody’s Investors Service said it was “a bit early” to judge the government’s policy and structural reforms after changing its outlook on the country’s credit ratings to negative almost three months ago.