By David Christianson
It might seem churlish to complain about a Mining Charter process that now looks likely to achieve long-awaited consensus, but the degree of executive activism envisaged by Mineral Resources Minister Gwede Mantashe is dismaying.
The industry has long sought regulatory certainty and has on many occasions and in many guises stated that it does not need an optimal investment climate, only a predictable one. Under Mantashe, it may not get either.
In response to the High Court ruling — that the "once empowered, always empowered" principle must prevail — Mantashe has declared that "we are not in support of a blanket recognition of past deals". He wants "each case to be assessed on its own merits" and, ominously, has stated that the department is prepared to go to court "every day" to do this.
It seems that Mantashe’s perception of the nature of a mining minister’s job is to run the entire sector in a continuously engaged hands-on manner. In organisational life, this is called micro-managing and is not much praised.
Mantashe has said that he has "no tolerance" for empowerment partners who "speculated" — in other words sold out their shareholding to make a quick profit. But this intolerance is a reflection of a bureaucratic mindset.
Those black economic empowerment (BEE) beneficiaries who "sell out" their shares are rational economic actors, behaving in a manner consistent with the rules of the market, as determined by Mantashe’s own department. The profits they make may become available for re-investment in mining, something which would transform the industry far more, surely, than Mantashe’s officious interventionism.
However, the bureaucratic mindset is characterised by the conviction that the official knows best, so it is Mantashe — or whoever occupies the minister’s chair — who will determine whether a partner who cashes out has been "speculating" or, instead, making a clever and timely investment exit.
But can the minister really be expected to understand the multitude of factors that affect investment decisions? Would he know whether a clever empowerment partner has made a rational decision based on an assessment of future global demand trends for a commodity and decided to move their money elsewhere?
In any case, what business is it of his? If a beneficiary partner wishes to cash out and spend the proceeds on bling, that should be their decision, not Mantashe’s. It is only because he views the proportion of "black ownership" in the industry as an overarching bureaucratic goal that he can even think about judging such decisions.
There are many ways in which it is acceptable for government to order an industry around. It is government’s role to prevent unacceptable social, economic and environmental externalities. But the point is that, except under the most unusual circumstances, such actions must occur under a consistent, transparent and accepted set of regulations.
What the industry needs least at this point is a minister who continually fiddles with the conditions under which it operates. Executive discretion is the biggest single threat to a stable investment climate in the industry. That was the essence of the problem with the version of the charter his predecessor, Mosebenzi Zwane, tried to introduce.
There is no doubt that everyone, other than a few crony capitalists, regards the minister as a vast improvement on his egregious predecessor. But the mood of greater optimism should not disguise the fact that the issue of the character of the minister is still far too central. A good investment climate requires impartial regulations where the personality of government executives is irrelevant.
*Christianson is a Policy Fellow of the South African Institute of Race Relations, a think tank that promotes political and economic freedom.
Read the article on BDL here.
