Companies / 31 July 2015, 09:12am / Nicola Mawson, IOL Business Editor
Johannesburg - South African mining companies are being constrained by state-owned enterprises, according to Anglo American’s CE Mark Cutifani.
Speaking at a Gordon Institute of Business Science event last night, Cutifani said the industry was being “constrained by expensive yet inadequate and unstable electricity supply, and by capacity limitations on state-run rail links from mine sites to export terminals”.
Cutifani noted state-owned enterprises (SOEs) play a crucial role in our economy in South Africa. “To a large extent, the ability of South African industries to compete globally is influenced by the effectiveness of our SOEs.”
The mining leader added many South African industries rely on and intersect with the services provided by SOEs at critical points, regardless of whether this relates to providing energy, rail or port services, for example.
“Unless all links in the chain develop at the same rate and in collaboration with one another, a pinch point will appear and the chain will break or at least be severely constrained.”
Cutifani says there are already various “pinch points” with state-owned enterprises.
SOEs have been in the spotlight in recent weeks, and former finance minister Trevor Manuel has also indicated they need attention.
Manuel said, speaking at the Sandton Convention Centre on Thursday, at the Sanlam i3 Summit, that Eskom, along with other state-owned enterprises, lacked efficient management and no matter how much money was thrown at them, this would not solve the problems they faced.
“Unless you deal with the management issues, you think its a money matrix. But regardless of how much money you throw at the issue, you can’t sort out this large complex corporation that can generate and transmit and distribute energy, that can fund itself,” he said.
Manuel and Cutifani are speaking against a backdrop of SOEs, including Eskom, SAA, PetroSa, the Passenger Rail Association of SA and SABC, grappling with management problems and the resignation of executives.
Earlier this month ANC secretary general Gwede Mantashe said state-owned must sort themselves out, although troubled state-owned enterprises would remain important
Cutifani says, because SOEs form an integral part of the backbone of SA’s economic and industrial infrastructure, they must be prioritised for investment. However, he said the private sector could not bail out public enterprises.
Cutifani said the country needed to create conditions that would help state enterprises become successful. “They need to be led through the lens of commercial decision-making.
“In our system, a government that supports uncompetitive SOEs cannot criticise private enterprise for taking the necessary actions to survive in these tough times.”
“We have to survive these tough times together. For SA to be successful it cannot be left to one group to carry the burden and lead with competitive and efficient business practices – we must work together as partners to create a sustainable future together.
“And as real partners we must speak the truth and be constructive in speaking to that truth. I hope my comments tonight are taken in that spirit of wanting to be a true partner in creating the new South Africa.”