Is this the silver bullet that could save the South African mining industry?

22 September 2014, Bernard Swanepoel

Ray Hartley boldly claims in his Sunday Times article (21 September) that the future of mining arrived on a winter’s day in July when South Africa’s newest platinum mine, Booyersdal, began production. Jana Marais, in the same edition of the Sunday Times quotes former Lonmin CEO, Brad Mills as believing that mechanising South Africa’s platinum mines is the solution to the industry’s cost and labour woes, even though that belief and strategy cost him his job.

If new mines are to be built as low labour requiring mechanised mines, where does this leave the current distressed gold and platinum mines of South Africa?

Most managers and investors agree that the labour intensive mines are not likely to be retrofitted into modern mechanised mines. Many a good miner has staked his fortune, credibility and job on that line of thought – with Mills being the most recent high profile example.

It is on these mature mines (where approximately 180 000 people are still employed) that we need a solution to the destructive conflict of demands for real increases in an environment of decreased productivity.

Sibanye (and perhaps Harmony before that), is proof that focused management can certainly ‘buy time’ through once–off improvements once these mines are liberated from top heavy corporate structures. The current environment of over-regulation in South Africa makes such once-off improvements hard to sustain, as the valuations of smaller mining companies reflect.

If I could go back in time, the one thing I would have fought for with much more conviction would have been the flexibility to operate mines 24/7. By the time the old Apartheid regime’s prohibition on Sunday work was lifted, the new Labour Relations Act and the very powerful unions meant that this potential productivity and job creation game-changer had slipped away.

Has this potential opportunity disappeared permanently or is it possible for key stakeholders to agree that “wasting” around 40% of available production time may be the one thing that can save the industry?

This is one of the topics that CEO’s, (among them, Mark Cutifani with his international perspective and deep understanding of South African mining), will be discussing together with politicians and union leaders on 8 and 9 October at the Joburg Indaba