First published in the Daily Maverick 168 weekly newspaper.

During a webinar this week with fund manager Ninety One, Froneman revealed that he had had a chat on the phone earlier that day with Mantashe.  

“This morning, I received a call from the mines minister, acknowledging how well mining is currently doing and in his normal, humorous way, he pointed out to me that his portfolio in Cabinet is now being recognised for the first time as an industry that is not sunset. So that bodes well for mining in general in South Africa,” Froneman said.

The mining industry is certainly doing well at the moment, thanks in large part to the current commodities boom, which was the focus of the webinar.

Sibanye earlier this month unveiled record quarterly earnings in the first three months of this year. Group adjusted Ebitda (earnings before interest, taxes, depreciation and amortisation) soared in Q1 by 78%, compared with the same period last year, to $1.3-billion.

This is largely because of the platinum group metals (PGMs) side of its business. The prices of palladium and rhodium, used to cap emissions in petrol engines, have surged to record levels on supply shortages and tightening emissions regulations. Rhodium has come close to $30,000 an ounce.

This rising tide has lifted more than PGMs. Iron ore has also scaled new peaks as China’s economy moves back into top gear, pushing Kumba Iron Ore’s share price to record highs this past week.

And gold remains perky at more than $1,800 an ounce, supported by low interest rates and lingering uncertainties about the global economy. AngloGold Ashanti’s Q1 attributable profits were 51% higher at $203-million compared to the same period last year, despite production declining 7%.

Ninety One noted this week that the JSE resources sector this past year has delivered growth of 58%. But Froneman said during the webinar that the investment case for the South African mining sector remains hobbled by the investment environment.

“I don’t think the environment, despite the improved fundamentals, actually allows for capital investment to happen because the hurdle rates in South Africa are still too high, because of risks associated with the lack of an investor-friendly environment,” he said.

“The country could do so much more under a different environment … We are proudly South African, we are not leaving South Africa. But we do need to grow our business in a way that mitigates some of the risks,” he said.

These risks, he noted, include the usual suspects: rising power costs and the unreliability of power supplies, uncertainty about legal tenure of ownership, labour ructions, and so on. Aspects of the Mining Charter, notably the issue of “Once empowered, always empowered”, remain in legal limbo, adding to the overall atmosphere of uncertainty.

Froneman said that Sibanye had “many good projects” in the pipeline, but it was tough to get board approval in such conditions.

After Froneman’s latest public comments, one wonders if his next chat on the phone with Mantashe will be so cordial. DM168

This story first appeared in our weekly Daily Maverick 168 newspaper which is available for free to Pick n Pay Smart Shoppers at these Pick n Pay stores.