SIBANYE-Stillwater’s decision to restart its R6bn Burnstone gold project ought to be an unambiguously good news story. A substantial investment in a mine with an estimated 25-year life is precisely the commitment the South African mining industry needs. More than that, it is the signal international miners and investors need to see.
Yet there is a catch.
When Burnstone’s mining licence comes up for renewal in roughly two years, the company could face empowerment requirements that materially alter the project’s economics. Sibanye-Stillwater CEO, Richard Stewart, has acknowledged that this could put the capital decision at risk.
Effectively, what should be an investment judged on its economics has become, at least partly, a question of faith.
Sibanye-Stillwater is proceeding amid hopes that negotiations over amendments to the Mineral and Petroleum Resources Development Act (MPRDA) will deliver a workable outcome. The Minerals Council’s positive assessment of engagements with the Department of Minerals and Energy, and its confidence in the Nedlac and parliamentary processes, are encouraging. But encouraging discussions are no guarantee of dependable rules.
Having traced the travails of the industry’s regulatory evolution in Digging Deep, I find the familiarity of this predicament more striking than the optimism surrounding it.
We have been here before.
From the “once empowered, always empowered” dispute through successive Mining Charters, and multiple court challenges, the industry has spent years trying to establish whether meeting government’s requirements means it can regard its obligations as settled. Now another legislative process threatens to reopen the question. The rules change, compliance is contested, and investors are asked to keep committing capital while the argument continues.
There is nothing inherently wrong with revising legislation. Governments routinely do so the world over. But South Africa’s mining history gives us reason to ask whose interests those revisions serve: the broader economy and the people in whose name transformation is pursued, or a politically connected few?
South Africa’s record, however, gives investors reason to question whether the next revision will resolve uncertainty or merely perpetuate it as it has done for more than 20 years.
It is astounding that, after more than two decades, a company should be expected to approve a long-life, enormously beneficial investment, without knowing how its empowerment obligations will be treated at renewal.
Improved relations with the department are welcome and widely discussed with a sense of relief. They are not, however, evidence that the underlying problem has been resolved. Goodwill across a negotiating table cannot substitute for clarity in the law.
Not that this is an argument against transformation. Not at all.
Mining’s historical injustices make meaningful redress indispensable. Government’s responsibility extends well beyond protecting corporate returns. But workers, communities and prospective black investors also need an industry capable of attracting capital and sustaining operations. Transformation and investment cannot sensibly be treated as competing objectives.
We should not be required to accept the uncertainty surrounding Sibanye-Stillwater’s investment as normal.
A government seeking investment should be able to state what compliance requires, how previous compliance will be recognised and what conditions will apply at renewal. These should not be favours to business. They are the foundations of a credible regulatory system.
Nedlac may yet deliver a workable settlement. But the test is whether it produces legislation investors can rely on long after the capital has been committed ad the next generation has taken over those mines. After more than two decades uncertainty, the outcome must end the need to invest on faith.
Jade Davenport is a historian and writer whose work explores mining, history, business, and society. She is the author of Digging Deep: A History of Mining in South Africa, now in its second edition.