The state of South Africa's mining industry

In the run-up to the 2017 Mining Indaba, Leon Louw, editor of the magazines Mining Mirror and African Mining spoke to a number of mining experts about the current state of the South African mining industry, its challenges and the opportunities.

Despite a slight recovery in commodity prices, the South African mining industry still faces glaring challenges, but at least — unlike a year or two ago — hope and optimism seem to prevail.

Nevertheless, as international investors prepare themselves for the more streamlined and new look of the Mining Indaba, they will also start drawing up a list of questions to ask the South African contingent at the event. Although the African continent is the focus at the Indaba, the South African representatives can be assured that the most probing questions will be reserved for them — especially if they are government representatives. Finding reasons why investors are hedging their bets when South African mining projects are punted is not that difficult. The main reason, however, is that the risks of investing in South Africa have grown almost exponentially over the past two years. Notwithstanding the country’s first class infrastructure and exceptional geology, political instability and uncertainty currently trumps these factors in any high-level risk assessment. The fact that South Africa survived a downgrade by international credit rating agencies late last year helps the cause, but it serves only as a plaster on a festering wound.

The main concern for most mining commentators is the regulatory uncertainty, and most agree that this will be the major challenge for the South African mining industry in 2017.

Uncertainty makes investment stumble

According to Warren Beech, partner and head of Mining at multinational law firm Hogan Lovells, about 242 pieces of legislation that address all aspects of the business from the regulatory side of things, through to aspects such as the anti-smoking laws apply to the mining industry. “This makes for an extremely complex environment that is further exacerbated by regular and constant changes to legislation,” says Beech. He adds that change in itself is not a problem. “Change must be expected, and one works with these changes. The real concern relates to key pieces of legislation, in particular the Mineral and Petroleum Resources Development (MPRDA) and the Mine Health and Safety Act (MHSA), which are not always given the urgency and attention they require. The MPRDA is not bad as it stands, and neither is the MHSA, given the frequent amendments they have undergone over time. However, there is the perception that government is not accelerating the most recent required amendments to the MPRDA, some of which have been under discussion for over two years,” says Beech. 

“With all legislation there is a process that needs to be followed within the constitutional framework. The process cannot be rushed. Commentators are often quick to criticise government, but there is a need for a fine balancing act and proper, in-depth consultation and engagement with all stakeholders before a piece of legislation is enacted. In addition, what we may see as urgent is not necessarily government’s priority. It is a matter of constantly engaging with government, and promoting the required changes.”

The processes are also complicated, where multiple governmental departments are involved. Complicating this further, is that South Africa had a number of different mining ministers over the past three to four years, each with their own approach and needing to bring themselves up to speed after their appointment. Beech says that we really need to see one minister sustain that position for between four and six years to ensure that changes occur effectively and quickly, and are implemented.

“Efficient and effective change of legislation requires a number of stakeholders to work together. For example, if the trade unions and the mining companies co-operate, agreements can be reached more quickly,” says Beech. This is actually happening currently. A good example has been the recent wage negotiations in the platinum industry, where the trade unions and the mining companies have developed a level of trust. It is, however, also important to recognise that other stakeholders, such as the communities and the regulators, play an important role, and it is essential to develop a relationship of trust with these stakeholders.

Inconsistent interpretation cause for concern 

According to Beech, another big concern for the industry should be the high degree of uncertainty, and inconsistent interpretation and application of the MPRDA. An example of this is the changes to the environmental components of the MPRDA and the implementation of the “one environmental system”. The ability to comply with the environmental requirements is of key importance to most investors, for various reasons, including the medium- to long-term costs of compliance and the potential consequences of non-compliance.

“A good example is Chinese investment in South Africa. Several years ago, the primary criteria for the acquisition of mining operations were to secure the sources of supply. This focus has now shifted to the cost of compliance and the potential consequences. This has created a very cautious investment environment,” says Beech.

With the amendments to the MPRDA still in process and the third version of the Mining Charter only recently being made public, there is a high degree of caution from investors. This is complicated by several uncertainties that remain regarding the implementation of the regulatory provisions by key departments, namely the Department of Mineral Resources, the Department of Environmental Affairs, and the Department of Water and Sanitation. While the implementation of the “one environmental system” was aimed at streamlining environmental authorisation processes, it is still necessary for the departments to work together to ensure a common interpretation and application of the applicable laws.

Uncertainties surrounding the regulatory (licencing) requirements in the MPRDA, the environmental provisions, and the Mining Charter have resulted in a level of uncertainty that creates a cautious investment climate. Yet, it is important to note that a number of significant aspects impact on investment decision-making, including perceptions around political stability, in-country risk, employment costs, and community influence. Concerns regarding available infrastructure (roads, rail, ports, electricity, and water) also play a significant role in the decision-making. Generally, a good rate of return will mitigate some or all of these risks and influence the investors’ appetite for risk. Historically, South Africa has provided a good rate of return. Provided this continues, in comparison to other countries in Africa, South Africa should still see a good level of investment.

Social aspect more important

According to Beech, investors are also more frequently considering the social aspects associated with mining operations. “It has become vital for communities to endorse mining operations. Without community buy-in, the commencement of projects and subsequent operations can be severely impacted — operations can even be closed completely.”

Although Beech is of the opinion that mechanisation and automation will be high on the list of priorities, he doesn’t believe it is the magic wand that will cure all of South Africa’s mining ills. “Several mines in operation today were designed and constructed many years ago. These older mines are generally labour intensive, and it is difficult to change the design suddenly to make mechanisation possible. It is much easier to design new mines with mechanisation and automation in mind. I think we are likely to see a mixture of mechanised mines and those mines that remain labour intensive operating in the South African mining landscape,” says Beech.

 Mechanisation and automation are frequently discussed and must be considered as South Africa’s mines get deeper and the working faces move further away from the shaft infrastructure. It also affects the health and safety aspects of a mine. The capital expenditure to mechanise mining operations is extremely high and while there are good examples of such mines in South Africa, it is likely to take some time for mechanisation or automation to be the predominant mining mechanism. Beech says that mechanisation and providing regulatory certainty are the two most important factors that will have a significant effect on the South African mining industry.

Politics in mining

Beech believes political risk is still one of the most important considerations for potential investors. Similarly, aspects such as an environment that does not respect the rule of law, and a system that does not provide appropriate avenues to challenge decisions of government, play a significant role in any decision-making. “Unfortunately, the message that is sent overseas is not the most positive, and definitely does impact on investment decisions,” says Beech.

Yet, although the overall picture seems rather bleak, there are positive signs. Firstly, the general view among analysts is that recent positive developments in the industry, including the rising commodity prices and increased demand, will be sustainable in the short to medium term. This changes the perspective of the industry, and positive sentiments generally support expenditure on exploration and development projects.

A decrease has occurred in the number of mining companies and related entities that have gone into business rescue over the last two to three months, also adding to a positive outlook. “The key challenges that will remain, however, are regulatory uncertainty; concerns in relation to available infrastructure, in particular roads, rail, water and electricity; the high costs of employment; workplace disruption as a result of industrial action and mine stoppages by the DMR; community involvement; and concerns regarding the number of fatalities that occurred in 2016,” Beech adds.

For Beech, the most significant events in the mining world during 2016 were the recovery of commodity prices and demand in respect of certain minerals. Another noteworthy development was the avoidance of a mass strike in the platinum industry. “There have also been positive discussions regarding the modernisation of South African mines, including mechanisation and automation.

 “There has been some recovery, and the general view is that this recovery is sustainable. My view is that we are going into a period of stabilisation to ensure that the operations can be sustained. There has also been significant restructuring of the mining industry, with several of the major mining companies disposing of assets. This has created opportunities for new entrants into the industry and it will take some time for these new entrants to settle down,” says Beech.

More expansion and growth expected

According to Wickus Botha, African mining and metals sector leader at EY, 2016 was a taxing year for the South African mining industry, as it was for the global mining industry. “Globally the mining industry battled because of prolonged weak commodity prices, capital constraints, and the availability of funding. During the second half of the year, the mining industry showed signs of recovery with coal and iron ore prices moving into positive territory. So I think globally the mining industry is in a much better state than at the beginning of 2016,” says Botha. 

As Botha, most other industry experts agree that there is a lot more optimism now than a year or two ago. There is certainly a much greater appetite to invest, expand and look for opportunities rather than just putting heads down and fighting fires. A host of companies are looking at growing and expanding instead of focussing on cutting costs and preserving cash, as they were doing at the beginning of 2016. Last year was definitely the year when cash was ‘king’. Most mines were trying to preserve cash through savings by cutting back on capital and extending credit lines.

According to Botha, the cash preservation drive has been very beneficial for the mining industry. “It brought along highly favourable consequences. Executives remained focused on how they allotted capital and every decision to spend money was questioned by shareholders and interested parties,” says Botha. There is no doubt that the slump in commodity prices resulted in great introspection and serious questioning about the sustainability of some decisions such as acquisitions and expansions. It resumed a focus and financial discipline that was missing during the super boom and the momentum that is building up will most likely be carried into 2017 and beyond.   

Botha’s outlook for 2017 is that we will continue seeing a recovery of commodity prices. “I am certainly not of the view that it will be a commodity boom like we experienced before the slump almost two years ago, but I do think we will see a gradual improvement in the commodity prices overall. Of course some commodities will be out of kilter, we always see that, but on an overall basis we are definitely going to see the strengthening of commodity prices,” says Botha. Botha predicts more acquisitions and expansions in 2017. “The renewed discipline and focus on cash preservation has resulted in more lean and efficient organisations with a handle on wasteful expenditure. This has allowed mining companies a little bit more manoeuvrability and the ability to spend some money again,” says Botha. The third trend that Botha identifies is the move into the digital arena called industry 4.0. Extensive discussions are currently taking place in the mining industry on how to embrace the digital world. “The digital agenda will bring a range of opportunities to the mining industry. In contrast to commonly held views, I don’t think a digital strategy will necessarily result in massive job losses. What we will see is re-skilling and the need for new skills and different resources,” says Botha.

The big constraints

Botha concurs with other industry leaders that the big constraint in the South African mining industry is the current policy environment. Botha adds that the focus of drafting legislation should be to enable the industry and be written with the aim of supporting the mining and metals industry in a responsible and sustainable manner. Additionally, more can be achieved when legislation is drafted in a consultative manner rather than an instructive manner.

The overall strengthening of commodity prices has resulted in a number of mining companies looking for growth prospects. However, Botha notes that these prospects are not yet focussed on greenfields exploration, despite the fact that merger and acquisition activity has picked up significantly. A number of prominent gold mining companies, including Harmony Gold, Sibanye Gold, and Gold Fields, have already made, are in the process of, or are talking about strategic acquisitions. “What is encouraging is that in the platinum industry there was a commendable wage negotiation process that was settled without a strike — it shows that if negotiations are inclusive there appears to be a common way of understanding and finding common ground,” says Botha.

For Patricia Zvarayi, a senior analyst at Global Credit Ratings, positive noises could be adversely affected by government’s revisions of the Mining Charter. “This, for me, will be the major issue for the mining industry in 2017,” says Zvarayi. “There are encouraging signs that the upturn in the resources price cycle will hold, which will allow most global mining conglomerates to pick up projects that are currently mothballed earlier than expected. Unfortunately, a strong business case would be difficult to make in an inclement regulatory environment, especially given the burgeoning costs of maintaining South Africa’s legacy deep level mines; which continue to erode their competitiveness relative to other major mining territories, such as Australia, China, Australia and Russia,” says Zvarayi.

The major concern for many mining commentators is the dearth of exploration projects in South Africa. There are only a handful of mines currently being developed that have been taken through the entire project cycle. Although the majors undertake continuous exploration projects, new greenfields exploration projects in South Africa are few and far between, despite the country’s exceptional geology. According to Andrew van Zyl, partner and principal mining consultant (Due Diligence) at SRK Consulting, this lack of exploration results in few new feasibility studies. “The studies that are being done are generally on extensions, or in response to new technology or price changes that affect the extent of the existing resource,” says Van Zyl.

Van Zyl is excited about technology and innovation, which, he says, has the potential to have a dramatic impact on the mining industry. Especially new developments such as driverless cars could change the face of mining. “Driverless cars facilitate the visualisation of a space and a complex response to that space; this has the potential to filter into the mining industry and allow for safe mining of deeper orebodies. It also has the potential to increase productivity by allowing for productive work during the time that mineworkers currently spend travelling the increasing distances to the workface. The downside of driverless car technology is that it has the potential to dramatically reduce the demand for cars, with possible negative impacts on the demand for related mined commodities,” says Van Zyl.

The South African mining industry is, according to Van Zyl, under continuing financial and regulatory pressure, and it will have to take a broader and more integrated view of all risks and opportunities. “This 360 degree perspective has to lead the business down the cost curve into the lowest quartile of producers while addressing a range of challenges, from technical and financial to environmental and social,” adds Van Zyl.

Mining is inherently a long-term proposition. The decisions made on projects and investments usually have long lead times, and the returns are only realised over five to 10 years. Policy uncertainty thus complicates decisions and can lead to projects being delayed or cancelled. In addition, the weighted average cost of capital is a key input into the investment decision. Reducing the rate through good macroeconomic governance — such as controlling inflation, contributing to low risk-free bond rates, focusing on the credit rating, and creating confidence in the credit rating — will all contribute to projects going ahead.

As most thought leaders in the mining industry, Van Zyl believes a key issue that could hamper the South African mining industry is the political uncertainty. “It is difficult to predict which faction within the governing party will come to the fore; the outcome will either contribute to stability in the industry or — through real or imagined state capture and corruption — will continue to discourage investment in the short term,” says Van Zyl.

The 2016 municipal elections planted a seed that there could be a change in government in the next few cycles. However, despite some of the negative events of the past year, the country still has a responsible and credible finance minister and it has avoided a downgrade. Furthermore, the courts have continued to apply the rules of law, which is a source of confidence that benefits all sectors.

Challenges in 2017

Global events will more than likely have a major impact on the South African economy in 2017. Van Zyl says it remains unclear what impact the Trump presidency will have on the country. “A continued strengthening of the dollar could be a positive factor for the mining industry (although it would have negative consequences elsewhere in the country). Political upheaval in Europe could also lead to uncertainty, but it is not clear how this would affect South African mining. A trade war between the US and China could reduce demand for commodities, but the uncertainty could also lead to the gold price increasing — a mixed impact for the mining sector,” says Van Zyl.

“Closer to home, mining sector challenges such as falling productivity, water scarcity, and rising electricity prices will continue and it will require innovative responses from management and technology providers, as well as owners, government and labour.”

During the Investing in African Mining Indaba in February 2016, SRK stated that a price recovery was warranted and likely. This has indeed been the case — an example being Anglo American’s share price tripling during 2016. SRK stated that the majority of the producers on the cost curve should be able to operate profitability, given that demand had not declined, but growth was merely lower than anticipated. Commodity prices have indeed recovered, partly because of the dollar price and partly as many of the source countries’ currencies depreciated against the dollar. The lower prices over recent years have clearly impacted the industry, but this has led to streamlining and a renewed focus on cash generation — outcomes that should stabilise the industry going forward.

Regardless of the challenges, Van Zyl is reasonably upbeat about the industry in South Africa and is of the opinion that mining will continue to play a significant role in the South African and global economies. He does have his doubts about growth however, which he says might be limited. “Replacement of production will still be required, but growth in physical demand for commodities could be limited. An important factor behind this trend is the development of technology, such as driverless cars, which enables us to use assets that are generally underutilised and wasteful more efficiently. It seems unlikely that a long-term growth in physical demand and consumption of mined products can be supported,” says Van Zyl.

Importance of mining

Mining remains a fundamental economic pillar for South Africa. It has and continues to contribute greatly to South Africa’s socio-economic development. While the industry was the only loss-making sector in the economy for the past two years, making an aggregate net loss of R37-billion in 2015, South Africa continues to host one of the world’s greatest mineral resource endowments.

“It is true that the entire South African mining industry is under significant economic and financial pressure. Indeed, the mining sector is the only loss-making sector of the South African economy, reporting an aggregate net loss of R37-billion in 2015,” says Roger Baxter, CEO of the South African Chamber of Mines.

Baxter says that rand prices of key export commodities have stagnated or declined while domestic cost pressures for mining inputs have risen by staggering rates. The cost of electricity has trebled over seven years; the total cost of wages increased by more than 10% per annum over a period of five years; and the cost of materials has increased by more than 10% per annum over the past five years (the cost of steel alone increase by 12% per annum).

“Challenges such as declining grade, aging mines, production disruptions (such as the inappropriate application of section 54s, industrial action, and community disruptions), infrastructure challenges (including electricity supply disruptions), and the inability to increase productive shifts per annum have had a severe impact on productivity across the industry. Between 1999 and 2014, for the platinum industry alone, output per employee declined by 49%, while real labour costs per kilogram produced increased by 309%. Improving productivity and reducing or containing costs are key to the sector’s viability in the future. All stakeholders have a role to play in helping to improve productivity and to lower the rate of cost increases,” says Baxter.

Global economic circumstances of the mining industry

Globally, the mining sector has been under huge pressure. The slowdown in the Chinese economy, anaemic growth rates in other regions, and exchange rate fluctuations, have all contributed to declining demand and prices for most minerals. In 2015 and 2016, the top 40 global mining companies were faced with the following challenges:

·        Commodity prices continued to fall as demand slowed and oversupply emerged;

·        Revenues fell by 21% to USD539-billion (2014: USD678-billion);

·        Operational costs fell to USD419-billion (2014: USD502-billion);

·        Impairments doubled to USD53-billion (2014: USD27-billion); 

·        The industry saw its first net loss of USD27-billion (2014: USD50-billion profit);

·        Gearing increased to 46% (2014: 38%);

·        Free cash flow decreased by 15%;

·        Miners impaired 32% of capex between 2010 and 2015; and

·        Market capitalisation decreased to USD494-billion (2014: USD719-billion).

Mining companies are currently focused primarily on cost cutting, improving productivity and capital discipline, and adjustment to ensure their survival.

Overcoming the challenges faced by mining

Baxter says that current levels of investor confidence is concerning. Investors naturally prefer certainty and stability, particularly with regard to legislation and consistent returns. “Given the long life cycle of mining operations, mining needs a predictable, stable and competitive regulatory environment. To encourage investment into mining, the South African mining sector needs policies that recognise the characteristics of mining and help reduce the risks related to investing in long-term projects,” says Baxter.

The Chamber of Mines has listed a few suggestions as to how the challenges faced by the mining industry today might be overcome, adding that a successful mining industry can be created by:

·        More effective problem solving partnership between government, business and organised labour;

·        A regulatory and legislative environment that is stable, predictable and competitive;

·        A stable and constructive labour relations environment and better social license to operate;

·        Access to available, efficient and cost-effective infrastructure (electricity, rail); and

·        Solutions to improve productivity (next generation mining) and reduce cost pressures.

 According to the Chamber of Mines, a key focus area for the industry during 2017 will be “to continue to work with all social partners to find practical solutions that will ensure the sustainability and viability of the mining industry”.

“This is a resilient industry that has risen to the challenges many times in the past. It is imperative to deal with the short-term issues to ensure sustainability and then focus on the key constraints holding back investment and growth in mining in the medium and longer term. We need to work together to stabilise the industry and realise its longer term potential,” says Baxter.

From a labour perspective

The lack of new exploration projects is also a concern for Gideon du Plessis, general secretary of the labour union Solidarity. Du Plessis says that due to the high levels of uncertainty regarding the legal framework, coupled with labour relation challenges and political instability, a lack of capital and expansion projects exist. “It seems that a wait and see approach is being adopted,” says Du Plessis.

Platinum mining houses are also still recovering from the setback in 2014 when Association of Mineworkers and Construction Union (AMCU) members downed tools. The five-month strike wiped out profits and left companies with insufficient cash reserves to fund capital projects. “The union rivalry between AMCU and the National Union of Mineworkers (NUM) is a lose-lose situation. Employers need to do away with the undemocratic majoritarian principle of trade union recognition and allow the four traditional mining unions (which include Solidarity and the United Association of South Africa [UASA]) to enjoy recognition at all mines where they have members,” says Du Plessis.

According to Du Plessis, Solidarity has a concern regarding the functioning of the Department of Mineral Resources (DMR), with many key positions being filled by senior employees in an acting capacity or by people with a struggle history — but not a mining history — and the absence of the minister from key mining events.

Du Plessis and Solidarity are of the opinion that clauses in the mining charter that provide for additional costs to the employer should be scrapped, since the additional costs will merely be recouped from workers by giving them smaller wage increases, and marginal mines will either shut or reduce staff. “The uncertainty regarding the issuing and retention of mining licences needs to be addressed and private property ownership should not be tampered with. Radical unions must come to the realisation that you can negotiate and strike members out of a job,” says Du Plessis.

 The Minister of Mineral Resources tasked the Mineral and Petroleum Board with establishing a blueprint to identify all the factors that lead to job losses and to create possible solutions to prevent job losses. This report will be handed to the minister in early 2017 and it should be given priority status to ensure that all role players agree and implement all the key features that will prevent job losses, while simultaneously increasing the sustainability of the mining industry. This job losses report has to form the basis for a compact that needs to be entered into between all mining stakeholders to ensure stability and growth of the mining industry. Du Plessis says that the Labour Relations Act has to be amended to provide for a secret strike ballot that will prevent union leader driven strikes and ensure that workers have the ultimate say before they are exposed to a strike’s “no-work, no-pay” principle.

“At the moment there are many concerns in the mining industry,” says Du Plessis. “A return on investment can take up to 20 years to be achieved and political uncertainty tends to scare investors off from making long-term commitments. The perceived corruption in the issuing of mining licences needs to be addressed, especially matters relating to the recent controversial awarding of Eskom coal contracts,” says Du Plessis.

Although the outlook for the South African mining industry is not as dire as it was in the beginning of 2016, a host of issues remains to be dealt with in 2017. A number of mines are being mined out and the accompanying forced downsizing of staff will increase the number of desperate mining employees that join the illegal mining trade. The 2017 coal wage negotiations might be an area of conflict due to the fact that the coal mining houses have indicated that they have withdrawn their mandate to the Chamber of Mines to negotiate wages and terms of conditions on their behalf – each mining house wishes to negotiate on its own at company level. If the transition process is not properly managed, then the wage negotiations can kick off with a dispute between mining unions and employers even before the negotiations have commenced.

However, Du Plessis regards the recent platinum wage agreement between AMCU and platinum mining houses that was achieved without a strike as the highlight in 2016. “The commitment and faith that Sibanye Resources showed in the South African mining industry by moving into the platinum sector is a positive event. It is a pity that Sibanye’s BEE status prevented them from tendering for the take-over of the Anglo Coal Eskom contracts,” says Du Plessis. Du Plessis has no doubt that modernisation or mechanisation of deep mines and marginal mines will extend the life of mines and create better paying mining jobs for skilled workers. The 2018 gold wage negotiations might also pose a challenge due to a rumour that Sibanye Resources may withdraw from the centralised negotiation process, preferring negotiations to take place at company level. “If wage negotiations continue as normal under the auspices of the Chamber of Mines, it will be a tough negotiation, with a number of internal and external factors influencing the negotiations. The NUM and AMCU will in all likelihood continue their battle to be the dominant gold sector trade union.”

More discussions

According to Godknows Njowa, mineral resource manager at Venmyn Deloitte, very little money, if any, is being invested in exploration by operating mines or junior explorers — mainly because of the low commodity prices and the general sentiment in the industry. In the mineral business, favourable commodity prices drive exploration activities. “The recent recovery of most commodity prices in the second half of 2016 has seen renewed interest in prospective exploration projects. For example, the manganese ore price more than doubled during the period. As a result of the upturn, projects and operations received a new lease of life and hopes were revived that these projects will eventually become sustainable and economical,” says Njowa.

“When the commodity prices are low and if development has not started yet, the project will be put on hold. Those mines that are in construction would have to be finished in anticipation that the commodity prices will recover. Few new potential projects are looking to raise funding. In a depressed commodity market, it is very difficult to raise finance even for very good projects. The investors and mining companies are in the cash preservation mode,” says Njowa. “The recent recovery in the commodity prices is anticipated to change this perception in 2017, and would improve activity in the mineral industry,” he adds.

Njowa further notes that a few projects are in development that is subject to financial closure. However, the investments into the mineral industry are at its lowest at the moment with very limited foreign direct investment in this sector. “This is mainly due to the depressed global commodity prices, uncertain political environment, and unstable mineral policies: for example, issues around compliance with the mining charter,” says Njowa. Furthermore, he says that labour wage disputes and strikes are likely to occur in South Africa — especially in the build-up to the national elections — if these wage discussions are not managed by employers’ representatives and the union representatives.

“In my opinion the lack of trust between the mining companies and the government should be something of the past. All players in the economy need to work together and present an action plan for growth and transformation that encourages investment, thereby putting South Africa first,” adds Njowa.

“There have been so many committees and discussions in an effort to address these issues. These include the Mining Phakisa LAB and MIGDETT (mining industry growth, development and transformation task team). The recommendations from these discussions should be implemented with some kind of urgency, with proper consultation with the stakeholders. The fact that these discussions are happening now would signal that, as a country, we are already trailing behind and it is negatively impacting the economy. However, such changes do not happen overnight. A combination of these factors has created a perception that South Africa is seen as an unreliable supplier of commodities to global markets. This perception can only be changed if the government and the mining industry work together to address these challenges systematically.”