Untested new South Africa mines minister faces baptism of fire

by Reuters
Monday, 26 May 2014 12:55 GMT

* Enduring platinum strike will test Ngoako Ramatlhodi

* Strike is longest, costliest in S. African history

* New minister said to have strong black empowerment views

* Could be tough negotiator for producers over restructuring

By Ed Stoddard

JOHANNESBURG, May 26 (Reuters) - South African President Jacob Zuma's appointment of a new mines minister unfamiliar to the sector but known for his black empowerment views adds uncertainty to prospects for ending a crippling four-month-old platinum strike this is hurting growth.

The stoppage at Anglo American Platinum, Impala Platinum and Lonmin is already the longest in the country's history and has damaged Africa's most advanced economy.

It is also showing signs of descending into violence. Five miners have been killed in the past two weeks as some seeking to return to work face strike pickets. The latest round of wage negotiations to try to end the dispute, mediated by a labour court judge, has made little headway.

This will mean a baptism of fire for Mines Minister Ngoako Ramatlhodi, a 58-year-old lawyer and former deputy minister in the prison service, who was named as part of Zuma's new-look cabinet on Sunday.

By contrast, the promotion to finance minister of Nhlanhla Nene, who takes over from the respected Pravin Gordhan, was taken as a sign of continuity in the reshuffle, which follows the ruling African National Congress's convincing re-election on May 7.

The president says the priority of his second five-year term will be to advance a National Development Plan - generally viewed as business friendly - to create jobs and boost growth.

South Africa's mining industry, already hurting from the platinum strike and facing expected job cuts and restructuring, may find a tough government interlocutor in Ramatlhodi. He has a reputation as an often gruff African nationalist who believes the economy remains too heavily concentrated in white hands.

"Ramatlhodi is someone who will put the mining industry's feet to the fire in terms of black economic empowerment and the mining charter," said Richard Calland, a political commentator and associate professor in the Public Law Department at the University of Cape Town.

Mining companies have been scrambling for years to meet the targets set out in the government's "Mining Charter", including one that calls for 26 percent black ownership by this year.

"He will be a more robust minister than his predecessor and the mining companies will have to prepare for some quite tough negotiations with him," Calland said.

Outgoing Mines Minister Susan Shabangu, who opposed calls to nationalise the industry, was seen in boardrooms as someone who tried to balance the ANC's political agenda to redistribute ownership with the need for companies to make a profit.


"Everyone will be holding their breath for the next month," said Peter Major, a fund manager at Cadiz Corporate Solutions.

"An unknown is never a plus, especially coming into a high profile ministry that generates more than half of our foreign exchange and with the longest, costliest and messiest strike we have ever had on our hands," he said.

In contrast, investors have appeared more assured by the promotion of the affable deputy finance minister Nene to the top treasury post, seeing him as a steady pair of hands who will maintain the economic strategy followed by Gordhan.

But some commentators have questioned whether Nene possesses the same political clout within the ANC as Gordhan to be able to demand discipline from other government ministries and so rein in their spending and the overall budget deficit.

As he announced his new cabinet on Sunday, Zuma stressed the need to breathe new life into the flagging economy in order to make a dent in a 25 percent unemployment level and reduce persisting poverty and inequality, which still scar South African society two decades after the end of apartheid.

The strike standoff on the platinum belt is currently the biggest threat to the economy and has cost producers almost 20 billion rand ($1.95 billion) so far in lost revenue.

It is a key reason why the central bank last week revised its 2014 growth forecast down to 2.1 percent from 2.6 percent. ($1 = 10.2995 South African Rand) (Editing by Pascal Fletcher)

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