Former Reserve Bank governor and current chairman of AngloGold Ashanti Tito Mboweni did well to remind the delegates to the Mining Indaba that South Africa is not the only country where the government intervenes in the mining sector.
With all the noise that inevitably accompanies any government statement about the sector, one could be forgiven for thinking that in every other jurisdiction mining companies are allowed complete free rein to do as they and their shareholders please.
In Argentina, where AngloGold has an operation, the company has to pay a fine for every employee who is not from the state in which it operates; there are “near impossible environmental” standards imposed on its operations in the US, and in Australia the tax and “impossible environmental standards” are also major challenges. Significantly, given what is happening with some of South Africa’s own resources, Mboweni notes that in Australia “we’re told we’re not allowed to disturb the sand dunes”.
But Mboweni is also right to point out that the government does need to sharpen its communication efforts. It doesn’t need more communication – far from it – it needs to communicate a consistent message about what its policies are. He blames the media, opponents of the ANC and the ANC’s grammar – possibly in that order of significance – for not communicating the policies of the National Development Plan effectively. He says that different ANC leaders tell different audiences different interpretations of the policies.
In criticising this Mboweni may overlook the extreme difficulty facing ANC leaders when they are addressing audiences that are inevitably extremely diverse; one day it’s the financiers at the Mining Indaba, the next it’s labour and the NGOs at the Alternative Mining Indaba. While Mboweni might know nothing about tempering his talk to better suit his audience, for many politicians such tempering is an important part of the job.
Air passengers
The withdrawal of five airlines from Cape Town International Airport, particularly SAA’s daily flights to London, in the past year resulted in a drop in arriving passengers in November and December compared with the previous year.
But airport manager Deon Cloete pointed out yesterday that for the year as a whole there had been marginal growth in passenger numbers. Considering the strong growth in the two previous years, when international arrivals grew by 11 percent in November 2011 and 17 percent in December that year, he considered the 10 percent drop a “normalisation” after the hype of hosting the soccer World Cup and the economic difficulties in the UK and continental Europe.
He pointed out that a fall in air travel had been a global trend until recently, and airlines still flying into Cape Town, including new arrivals, were picking up some of the passengers lost though the withdrawal of Middle Eastern airline Etihad, which had increased its flights to Johannesburg, and Air Malaysia. Two local low-cost airlines, Velvet Sky and 1time, had ceased to fly.
Meanwhile, the airport is continuing to resurface its main runway, carrying out the work in stages in the six-hour periods at night between the last flight out and the first to arrive in the morning, and is working with the city council to rehouse occupants of the informal settlements built up closely to its perimeter, to enable further expansion of its industrial area.
Cloete said that both British Airways, which flies to Cape Town all year round and introduces a second daily flight in summer, and Virgin Atlantic Airways, which has returned with a seasonal flight from London, were both bringing heavy passenger loads. Emirates, which temporarily withdrew one of its two daily flights to Cape Town, had also restored the second flight.
US manufacturing
The US manufacturing sector is busy reinventing itself. “Whether it is called re-shoring, on-shoring, or the US manufacturing renaissance, there most certainly has been a notable influx of high-profile capital goods companies investing in US manufacturing facilities in the past several years,” according to a note from Citi.
“While the media has trumpeted this trend as a resurgence of US manufacturing, our analysis indicates that the motivations behind these investment decisions are broad ranging and more often company specific. They encompass geo-economic factors, a bullish US energy outlook, supply chain management, tax incentives, more accommodative labour unions, advances in automation, some typical late-cycle demand, and escalating wage inflation in emerging markets that is narrowing the labour cost gap.”
Just when we had all bought into the view that the centre of the world’s economic gravity was moving from west to east, Citi researchers have turned that perspective on its head.
“When these factors are viewed as a whole, the global implication is that there could be a growing flow of manufacturing activity back onto US shores, tipping the scales to a degree away from the emerging market investment paradigms that have predominated the past decade. The comparative weaknesses that sapped the vitality of US manufacturing in the 1990s have moderated, and what remains is a sector primed for some rebound.”
Shale gas is also contributing to a more upbeat outlook for the US. Citi said: “Thanks to advances in hydraulic fracturing and drilling techniques, shale gas discoveries in the US have created substantially lower natural gas prices and input costs for energy-intensive processes. Natural gas now costs three to four times more in Europe than it does in the US, thanks to the US domestic shale gas boom.
“The natural gas boom should benefit companies that have high exposure to the US oil and gas, petrochemicals, steel and fertiliser sectors,” Citi said.
Edited by Peter DeIonno. With contributions from Ann Crotty, Audrey D’Angelo and Ethel Hazelhurst.