[miningmx.com] — BIG changes are coming to the South African government and it is not immediately clear what the future holds for incumbent mines minister Buyelwa Sonjica after a massive shake up in the ruling African National Congress (ANC).
The most dramatic event at the ANC’s 52nd conference this week was the election of the controversial Jacob Zuma as president of the party, ousting Thabo Mbeki who is also president of Africa’s largest economy.
Mbeki’s second and last five-year term as the country’s president expires in 2009. The leader of the party is seen as the natural choice for national president. It’s an open question whether Mbeki will resign his position earlier.
a case that can be taken to court
Zuma faces the threat of a potential corruption charge linked to the convicted and jailed businessman Schabir Shaik who was found guilty of soliciting bribes on Zuma’s behalf. Mbeki fired Zuma as the country’s deputy president when Shaik was found guilty.
“The investigation, with the evidence we have now, points to a case that can be taken to court,” Mokotedi Mpshe, the acting head of South Africa’s National Prosecution Authority (NPA), told 702 Talk Radio the day after Zuma was elected party president.
There is no indication yet of if and when Zuma will be charged. The NPA has already had its first thrust at Zuma thrown out of court for being under-prepared and it has taken enormous pains to make sure of its case this time round.
Investors are taking a close interest in the change in leadership.
“There is a lot of interest, not just in terms of generic background, of what’s going to happen in South Africa but I think as well what implications this might have for the mining industry – platinum, palladium, gold,” GFMS CEO Paul Walker said on the Moneyweb Power Hour, a week-nightly radio broadcast.
“I do think there is a concern, I think a view that the maintenance of the status quo under Mbeki would have been ideal, but of course there’s still some time to go before we know precisely what’s going to happen in the post-Mbeki period,” Walker said.
“The view is that the pressures will be on the institutions and the people involved in running the country to maintain as much of the status quo as possible, because things have worked reasonably well over the last eight or nine years.”
As part of the titanic battle for control of the party, a number of cabinet ministers seen closely allied to Mbeki have lost their places on the 80-member policy formulating National Executive Committee (NEC). The NEC wields strong influence over decisions the government takes.
Investors must surely be breathing a sigh of relief that highly regard and respected finance minister Trevor Manuel has retained favour with the Zuma supporters and kept his place in the NEC.
Zuma is seen to owe a huge favour to labour and the left for their support in ousting Mbeki. Two of the leadership positions of the NEC have been filled by former unionists. Kgalema Motlanthe and Gwede Mantashe both served as secretary general of the powerful National Union of Mineworkers.
There have been worries the government under Zuma could ditch or substantially alter the market-friendly policies set up under Mbeki.
Zuma immediately moved to quell investor concerns and give a steady-as-she-goes message. “There is no reason for uncertainty or fear in any quarter,” Zuma said in his first public address in his new position. “There is no reason why the domestic and international business community, or any other sector, should be uneasy.”
The ANC is keenly aware of the need for foreign investment to address massive unemployment, poverty and crime. Its policies have generally been market friendly, but under Zuma there will have to be a nod towards easing labour’s concerns that legislation is too favourable for business rather than the workers.
A large swathe of cabinet ministers seen as close to Mbeki have lost their positions in the NEC and are unlikely to retain their posts if and when Zuma becomes the country’s president.
Sonjica seems to be a low profile figure in the ANC, appearing on neither the last NEC list nor the new list, making it difficult to judge which camp she was in during the presidential battle. She is competent in her post and there’s no reason she shouldn’t keep her job.
Alternatively, Zuma and his allies might regard the minerals and energy portfolio as strategically important and reward it to one of his supporters. It is a highly unionised and economically important sector of the economy.
SONJICA’S PERFORMANCE GRADED ‘B’
Sonjica, who was appointed to the portfolio last year, came in after a relatively rapid turnover of ministers in the position over recent years.
South Africa’s weekly Mail & Guardian newspaper, which regularly blows the whistle on corruption within government structures and parastatals, gave Sonjica a “B’ grade for her performance in the position during 2007.
In its widely read and respected year-end report card on cabinet ministers, the Mail & Guardian said Sonjica had won praise for being open and willing to consult interested parties.
During Sonjica’s tenure as minister the Department of Minerals and Energy has taken a tougher stance on deaths at the country’s mines, shutting down affected areas pending the results of safety audits.
Gold Fields and Anglo Platinum have both revised production forecasts downwards because of the temporary closures, but other mining houses have been affected too.
“While mine safety is the responsibility of the industry, Sonjica will have to pay greater regulatory attention to it in the new year,’ the Mail & Guardian said.
“Questions have been raised about the effectiveness of the mine health and safety inspectorate, which seems to be struggling to attract skilled people.’
Sonjica’s ministry has to finalise the hotly contested restructuring of the electricity distribution industry and address the electricity generation crisis, the newspaper said.
In the past year, progress was made in reducing the backlog in processing new-order prospecting and mining rights.
The minerals and energy portfolio is a demanding one and subject to intense scrutiny by foreign investors, who want to see consistency in the way it is handled.
A leaked version of a mining charter outlining black empowerment requirements wiped out a third of the industry’s market capitalisation on the JSE in just a few hours in 2002. The government scrambled to repair the damage and later issued a much milder document after intense talks with the industry and labour.
If Zuma does become president this is a portfolio he and his allies will need to think about carefully and appoint someone who the market can trust.
