New mining minister in South Africa takes over during a difficult time

September 23, 2015

South African President Jacob Zuma shuffled his cabinet, moving his mineral resources minister Ngaoka Ramatlhodi to the public service and administration portfolio amid plunging commodity prices and planned job cuts and named Mosebenzi Joseph Zwane to the position.

Zwane is coming in at a difficult time. Reuters  reported that he is taking over a sector already bleeding jobs due to the commodity price slump, Zwane was confronted with the price of platinum, one of South Africa's most valuable exports, hitting a 6-1/2 year low due to the Volkswagen emissions tests scandal.

The concern is that any European consumer backlash against diesel cars, which use platinum in catalytic converters, could torpedo already shaky demand for the white metal, nearly all of which is produced in South Africa.

Platinum's biggest daily drop in two years is a stark reminder of what lies in store for Zwane as he tries to walk a line between hostile unions, hardline communists in the ruling ANC and mining firms that have done little to change their ways since the end of apartheid two decades ago.

Ramathlodi was appointed to the mines post in May 2014 amid a five-month platinum strike, the longest in the history of South Africa’s thriving mining sector, and he “showed mining companies that he is a custodian of our minerals,” Association of Mineworkers and Construction Union President Joseph Mathunjwa told Bloomberg.

On the other hand, Zwane, a former official of the Free State provincial government, “has no track record,” Mathunjwa reportedly said. “He has only been on a provincial platform. Mining is another terrain, it needs a person with thick skin.”

South Africa, the world’s leading producer of platinum, relies on mining for more than half of its exports and the industry employs about 440,000 people. But the country’s mining sector is facing a crisis as platinum prices have plummeted to six-year lows. Impala Platinum Holdings Ltd., the world’s second-largest metal producer, plans to cut as many as 1,600 jobs in South Africa at its Rustenburg mine, northwest of Johannesburg.

Lonmin Plc, the third-biggest producer, is planning as many as 6,000 staff cuts while as many as 420 managerial and supervisory positions may be eliminated at Anglo American Platinum Ltd., the largest producer. Atlatsa Resources Corp. may trim its workforce at the Bokoni Mine in northern Limpopo province by 10 percent, according to Bloomberg.

Zwane’s appointment as an unknown name in mining could alarm shareholders at a time when South Africa needs investment to overhaul the crippled industry. “The current challenges in the mining industry need someone with clout and political influence. Someone who does not have a high profile and is not a heavyweight, able to influence people in government and cabinet may bring grave concern,” Somadado Fikeni, an analyst at the University of South Africa, told Bloomberg.


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