Impala foreign, domestic woes linked

0
374

Nothing illustrates the old adage one person’s blind spot is another person’s obstructed view better than the recent multiple calamity at Impala Platinum (Implats).

The three-week strike reportedly resulted in three deaths. It cost 120 000 ounces in lost production, which will cost R2,4bn. In the Zimbabwean indigenisation crisis, Implats may permanently lose about half of its income from the company’s Zimbabwean mines, which constitute about 20% of revenue and profit.

The strike at Implats and the indigenisation crisis at Zimplats are regarded as separate crises that have coincidentally hit simultaneously. Here is a fascinating argument, not entirely my own, that they are not separate, and the implications are substantial for Southern Africa.

This extraordinary story involves not only South African politics, but also the elites in Zimbabwe, Mozambique and Botswana. This notion remains a theory at this stage, but facts do substantiate it, and if it’s true, it requires an immediate and dramatic political response — which we are unlikely to get.

But first, a short detour into the crucial “blind spots” of recent regional political history.

Zanu PF has transparently perpetrated on Zimbabwe a form of economic suicide. Once the second-most developed country in Africa below the equator, Zimbabwe’s economic base has been decimated, its population reduced to a land of emigrants and those who remain have been thrown back perhaps half a century in development.

But things are looking up. The recent relative improvement in the Zimbabwean economy after the country’s decision to jettison its own currency has resulted in a dramatic improvement in exports and imports, for example. But budget documents show even after this improvement, South Africa’s imports from Zimbabwe are a rounding error in South Africa’s international trade and are half of those from Mozambique.

Given the scale of this economic calamity, South African politicos tend to think the remaining Zimbabwean elite should be somewhat apologetic about reducing the country to the economic equivalent of Benoni. Think again. The Zimbabwean elite looks down on South Africans, particularly the African National Congress (ANC), and particularly President Jacob Zuma.

The reason is Zanu PF is essentially a military organisation, and regards itself as the military victor in the liberation war, while the pathetic South Africans were pretty useless as a military force and had to wait for power to be handed to them.

As a consequence, the Zanu PF elite regards the ejection of white Zimbabwe and farm grabs as a legitimate spoil of war, not acts of racist terrorism. For them, the ANC’s tortured attempts to deal with the land situation locally are just pathetic, forelock-tugging to the old colonial rulers.

This military underpinning always existed in Zanu PF, as the Matabeleland massacres in the early ’80s showed, but these tendencies were for long kept in check by the political wing of Zanu PF.
But as Zanu PF lost voter support, the political wing weakened and the military wing became stronger.
President Robert Mugabe threw in his lot with the military, with the calamity we see now.

The calamity has reduced the size of the economy, leading to increasing demands on the little that is left.

Only two substantial prizes remain, the diamond fields at Marange and the old platinum industry, which is going extremely well since it is really an economy within an economy.

A large slice of that is the old mines and smelters built by BHP and subsequently taken over by Implats. For Implats’ board, the demand to hand over 50% of the company is the trickiest problem it has encountered.

But the company has three advantages in this battle. The first is power. Zimbabwe gets its power from three sources, the old Kariba power stations, the coal power station at Hwange , and from Mozambique’s Cahora Bassa.

The 2 000 megawatts produced by State producer Zesa is about 80% of its needs, and it has invited the private sector to double that capacity.

But in the meantime it has run up a huge bill with the Mozambicans and has recently been put on terms. The only industry with the capacity to help pay that bill, thought to be about $100m, is the platinum industry.

The second problem for the “indigenisers” (actually the mines are being expropriated) is the nature of the platinum industry. Platinum is highly processed, long before it gets to the manufacturing stage.

In Zimbabwe, as elsewhere, platinum is mined, milled and smelted into matte. That matte is transported to South Africa where it undergoes refining. Without refining capacity in Zimbabwe, the indigenisers can do nothing with the matte without the co-operation of South Africa.

The third problem is international law, although this is not a big issue for the Zimbabweans. As it happens, Zimplats has a 30% indigenisation credit for land it ceded to the State some time ago.

That land is now going to be mined by the Chinese. It probably doesn’t mean much, but Zimplats does have a legal case.
—Business Day