The argument by the Organisation for Economic Cooperation and Development (OECD) that tightening South Africa’s wealth tax regime would rebalance ... generational inequality has a fundamental flaw: it targets a “flighty” base, says an expert from the African Tax Institute.
Mining at depths of 4,000 metres requires a stable electricity supply which the state cannot provide, says Miller, who now runs the AmaranthCX consultancy in Johannesburg. He spoke in the midst of a power cut in Johannesburg, which he sees as part of a wider failure of public service provision. Rail and post office services have collapsed, he says, and his neighbourhood is patrolled by paid private security guards.
The fact that South Africa has sufficient resources to “stagger on” has been an impediment to change. “No-one does a hard reset” on policy, Miller argues. He sees no sign that corruption has been reduced under Ramaphosa. South Africa is “a failed state in progress. That’s why no-one is sinking shafts.”
South Africa’s Witwatersrand Basin is still the world’s largest gold resource, but according to Minerals Council South Africa, the country’s gold accounts for only 4.2% of global production. Mining for gold in South Africa is more expensive than in many rival African producers, as many of the remaining resources are deep underground, with mine temperatures among the hottest in the world.
That doesn’t fully explain South Africa’s failure, Miller argues. “Every mine is in decline from the day it opens,” he says, pointing to failure to explore potential resources outside Witwatersrand. It has been decades since a new deep gold mining shaft has been sunk, and the kind of modern exploration and mining techniques used in Australia are passing South Africa by, he says.
South Africa’s northeast and northwest have unexplored gold potential, Miller says. He points to the lack of the kind of transparent online mining cadastre available in other African mining jurisdictions. There were more than 5,000 mining exploration applications as of February 2021 which had not been dealt with, and there has been no update on progress since, he says.
A global gold price collapse in 1989 from $900 per ounce to about $300 meant that many South African mines were becoming less profitable as apartheid ended. This set the stage for decades of decline. Some of today’s failings are due to the history of mining in South Africa under apartheid, which has left a “unique psychological scar” in the country’s memory, Miller says. But South Africa is “absolutely not” doing a good job of exploiting its remaining gold potential. “We give no financial incentives for exploration.”
Legacy shafts pose their own problems. According to research from Claudia Strambo and Aaron Atteridge at the Stockholm Environment Institute, many former South African gold-mining shafts have not been fully rehabilitated, with the process lacking incentives and transparency. This had prompted the spread of unregulated artisanal and small-scale mining, and environmental and physical hazards, the research says. Illegal mining, Miller says, has drawn no coherent policy response.
- He picks Ghana and Botswana as Africa’s most stable mining policy jurisdictions. Ghana in particular has understood that mining investments are made for the long term and require policy stability, he says.
- In South Africa, he argues, mining majors are ready and able to deal with a wide range of policy environments, but cannot at present rely on any given sent of policies being effectively implemented.
- There has, at least, never been a major state mining expropriation in South Africa. “If we could administer the policies it would work.”
South Africa’s decline in the mining of gold and other minerals will continue until the state shows it is serious about encouraging exploration.
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