I think that the platinum executives speaking to the folks in parliament yesterday was a great outcome for all of us. What it meant is that parliamentarians (who get bucketloads of freebies at your and my expense) can hear it from the
masquerading as beef horses mouth. Like I said last week, and I was talking about Hugo Chavez and Venezuela, they are going to be stuck with a whole lot of useless oil when the combustion engine ends. Equally, platinum bosses told the committee the bad news, and the truth. This Miningmx story lays it out: Amplats' Griffith "not confident" of saving jobs. See that simple line: "I'm not confident that we will come up with any clever ideas so that Amplats can become profitable again. Discussions have turned very aggressive, but that won't change the fundamentals."
I suspect that the combative to business politicians need to think a little harder when making statements that these mines make billion. No. As Griffiths said, 80 percent of their (Amplats) operations were unprofitable last year, obviously the already bleak landscape was exacerbated by strike action. As Griffiths suggested though however, 30 to 40 percent of Amplats operations would have been unprofitable if the illegal strikes had not happened. I think that he made it completely clear. Private business is not backstopped by government, in the case of SOE's, when their shareholder say enough, it is quite frankly enough.
It is not just the platinum producers under pressure on this score, AngloGold Ashanti had weak results yesterday, not too well received either. And these were the last that Mark Cutifani presented. There is a very nice interview on CNBC Africa, where Samantha Loring interviews him: AngloGold Ashanti Annual Results with CEO Mark Cutifani. Some very interesting points there, including having watched the Gold Fields split. But the frightening part comes when Cutifani starts talking about what is left in it for shareholders, from about 5 and a half minutes in the video clip. Very little as it turns out over the last five years, next to nothing, what a disgrace really. Cutifani tells the ugly truth.
He says that only 7 percent of revenues have been returned to shareholders, the other 93 percent goes to suppliers of goods and services, peoples wages, local community development programs and government in the form of taxes. And we are open for business? Give me a break here. As he says, when "people" and I am sure that he is referring to loose comments from government officials and the chattering types that taxes have to increase, that would amount to more than 100 percent, no viable of course. And he is worried that this type of talk is scaring people in an industry that has shrunk in value relative to the rest of the market.
Yes, we know what he, Cutifani, is talking about. Cutifani has a great way of explaining things, he says that anybody who thinks that mining in South Africa has a big pot of gold at the end of the rainbow "doesn't understand the numbers". But the good news is that Cutifani reckons that the Finance Minister understand which is why he is cautioning against folks expecting more. Quite frankly, there is no more. Higher taxes, as he says means less employment and less money for community development programs, simply because you do not have the money. He also talks about electricity prices being up 278 percent in five years, and the current Eskom proposals would take it up to a 578 percent increase. And that, he said, would force AngloGold Ashanti to continue to cut costs, and sadly the only that they can control is labour. So in other words, more taxes equals fewer jobs.