IDC boss says mining still offers a lot of value

It’s been rough lately for Mazwi Tunyiswa, head of the basic metals and mining unit at the Industrial Development Corporation (IDC). The mining industry is struggling because of the decline in commodity prices.

The IDC has been assisting the mining industry since the early 1950s, when Foskor was established. Today, R23 billion – almost a quarter – of the corporation’s R100 billion book is made up of mining investments.

“Mining and metals are very important to the life of the IDC,” says Tunyiswa. “A lot of equity investments are struggling and dividends are down. It’s not about the fundamentals of the industry – it’s a market issue.”

There may be more rocky times ahead, adds Tunyiswa, because “we may not yet have reached the bottom of the market”.

“We have to brace ourselves for a little bit longer, but the upswing will come.”

Mining is a cyclical business and commodities that are in fashion or demand change over time. It is now imperative to protect existing mining assets and save them for future use.

The upside is more demand to fund coal businesses. “There is more demand for coal because of Eskom, whose black economic empowerment policy is quite good for emerging miners.

“We are now more aggressively assisting emerging miners who can use this as a springboard for export markets.”

For Tunyiswa, it’s about beneficiating the country’s resources to create value.

“The IDC is looking to unlock value in the mining sector to the benefit of South African society. We also want to lower costs to benefit downstream manufacturers and increase the number of jobs in the metals value chain,” he said.

Tunyiswa says the IDC wants to see 21st-century mining companies who are socially and environmentally responsible while creating value for all their stakeholders.

“We want the surrounding community to be seen not as an expense but as part of value creation. The mines must be sustainable. Marikana was a classic example of unsustainable mining,” he says.

“We include this as part of our due diligence on applicants for funding. For example, you cannot have water for mining but no water for the mining community or the people who work there.”

Mining contributes R292 billion to South Africa’s GDP. It employs 496 000 people directly and there are 1.4 million indirect jobs.

“It remains a large, key sector which makes a key contribution to the economy. If we use our resources wisely and beneficiate, it has the potential to create more jobs,” says Tunyiswa.