This article first appeared in Groundup.

Shafted by the Guptas, the people of Blinkpan, Mpumalanga have transcended race and class barriers to help each other.

It was a dismal Christmas for thousands of coal miners in Mpumalanga when the formerly Gupta-owned coal mines of Optimum and Koornfontein, now under business rescue, stopped paying workers and contractors in October last year. It was the same story for workers at other nearby mines: Woestaleen, Boschmans, Klipbank, Setemba and Sandile.

In December a group of determined women, all of them employees of the nearby coal mines, decided to do something about it.

They set up a non-profit organisation called Feed the Miner and approached local businesses and farmers for donations. Six weeks later the organisation is providing food and grocery hampers to 650 families.

All of this is being run out of the Blinkpan home of Christo Mostert, a production foreman contractor at Koornfontein. Scores of miners and their families gather at his house twice a week to receive grocery hampers that should keep them going for a few days. Miners of every race join hands in prayer to give thanks for these modest blessings. They are surprisingly cheerful, given the miserable conditions they now find themselves in.

When the formerly Gupta-owned mines were placed under business rescue in February last year, staff never knew from one day to the next whether they would be paid. When the salaries stopped coming in October, so too did their pensions and medical aid. Many workers have had to borrow from family members to pay lights and water. There were no presents for the children at Christmas and no books or uniforms at the start of the 2019 school year.

There was jubilation in Blinkpan last week when a group called Project Halo was announced as the preferred buyer for the Optimum and Koornfontein mines, and the hope is that the R3.6 billion deal will be concluded within the next week or two.

“Project Halo was assessed as the best bid on the table, and of course we want to wrap things up as fast as possible so workers can get paid, but unfortunately there is a process that must be followed and certain legal steps must be taken first,” says Louis Klopper, business rescue practitioner for eight Gupta companies (including Optimum and Koornfontein) placed under administration when the major commercial banks distanced themselves from the Guptas.

In a statement issued this week, Project Halo said a priority is to “get the workers to keep their jobs, provide backpay and generally get their morale back again”.

This article first appeared in Moneyweb.

One of the great economic questions of our age is what caused the Great Depression and can we avoid a repeat?

Steve Keen, self-proclaimed ‘anti-economist’ professor of economics at Kingston University in London, has applied himself to the question for four decades and believes he has the answer. Debunking Economics (Zed Books, 2001; revised and updated 2011) is the product of that exploration. It is also a frontal assault on mainstream economics for lacking the rigour demanded of other scientific disciplines.

Whether a great depression can happen again – or indeed is already underway – is important because the last such period was accompanied by genocide and fascism. The stakes are high and the current prescription of bailing out failed banks, rather than over-indebted consumers, is merely prolonging the day of reckoning.

Keen is merciless in his attack on neoclassical economists. They are not up to the task of steering the world economy and their intellectual ministrations are not only misguided, they are fatal, he says. Our current economic system is held up by matchsticks that will likely lead to two outcomes: starvation or emigration. Either we reform the current economic system, including its money, or we risk ending up in a Hunger Games hell.

There is an element of apocalypse fatigue surrounding our economic trajectory with so many depressing books exploring aspects of the subject, but to turn away from the signals is criminally negligent. The markers of economic catastrophe are all around us: the debt-to-GDP levels hit 300% of GDP in 2008 when the world’s biggest banks ran to their respective governments looking for bailouts. That was 1.7 times the levels reached in the 1930s. The Great Depression was deepened by the massive deleveraging that took place in the 1930s, as people raced to pay down debt. The result was deflation, falling economic output and massive job losses. Followed by war.

This article first appeared in Moneyweb.

Eskom’s renewable energy drive is a financial disaster for consumers and an economic disaster for the country, according to papers before the Pretoria High Court.

The Coal Transporters Forum is asking the court to have dozens of power purchase agreements (PPAs) signed with independent power producers (IPPs) set aside on the grounds that the National Energy Regulator of SA (Nersa) authorised them without proper public consultation.

Lack of public participation sank the proposed nuclear deal in 2017 when challenged in court by Earthlife and the South African Faith Communities Environment Institute. Coal transporters believe the Pretoria court should find in its favour on the same grounds.

The court papers provide a fascinating insight into the costs of alternative energy. Eskom is purchasing renewable energy for 214 cents per kilowatt hour (kWh) when coal can produce the same electricity for 32 cents.

Eskom is then on-selling this renewable energy to the consumer at 86 cents per kWh. This cost the economy R9 billion in 2016, a cost that will be repeated each year until 2021. It also reduces coal consumption by three million tons a year, rising to 10 million tons by 2021, the court documents state.

Massive risk

These IPP contracts expose Eskom to massive risk, says the Forum. Nersa’s 2.2% tariff increase for 2017/2018 effectively means Eskom is sinking deeper into liquidity problems, at the ultimate cost of consumers and taxpayers.

“This means government is providing guarantees to the IPPs to destroy jobs in the mining sector,” says the Forum, which tallies the economic cost of the renewable energy programme as follows: Eskom will be forced to shut down at least five coal-fired power stations, one million permanent jobs will be lost, and 17 towns in three provinces reliant on coal mining will become ghost towns. Many more thousands of workers involved in coal transportation will be retrenched.

In short, it threatens to sink swathes of the economy in the name of greening it.

How did we end up in this mess?

In its answering affidavit, Nersa concedes that it did not allow for a public participation process, but followed the then minister of energy’s decision to procure renewable energy. The type of energy to be produced by Eskom is the minister of energy’s decision, in consultation with the regulator. The then minister Tina Joemat-Pettersson pushed the renewable energy contracts even though Eskom had spare capacity of 23%, excluding imports, renewable energy and other power purchases, says the Forum.

This article first appeared in Moneyweb.

The three suspended board members of the South African Nuclear Energy Company (Necsa) will get their day in the Pretoria High Court next week, but are having to fund it themselves – to the tune of R1.5 million. They are bringing an urgent case before the court to overturn the minister’s dismissal.

The trio believed their court costs would be paid by their employer as funds had been set aside for just such an eventuality. Instead, they are having to fund their court application with borrowed funds.

Energy minister Jeff Radebe suspended chairman Kelvin Kemm, CEO Phumzile Tshelane and audit and risk director Pamela Bosman in November last year on the grounds of “defiance and ineptitude”.

Read:

South Africa axes state nuclear firm Necsa’s board

Axed Necsa board blames resistance of ‘privatisation by stealth’ for dismissal

The removed board members say more sinister motives lie behind their dismissal; that the minister is party to plans to sell NTP Radioisotopes, a 100% Necsa subsidiary and one of the few profitable state-owned companies, to an American customer.

Radebe has specifically accused the suspended board members of unauthorised foreign travel, dissemination of false information to the media, unauthorised increases in remuneration, the months-long shutdown of the NTP medical isotope production facility, and the “unlawful” signing of a memorandum of understanding with Russian nuclear healthcare company Rusatom.

This article first appeared in Moneyweb.

International study overturns a few cherished assumptions about gender.

It’s always dangerous to challenge someone’s cherished victimhood, but a new academic study does just that: men in South Africa are more disadvantaged than women.

This may upend a few certitudes about gender equality, where women are perceived as the natural victims of discrimination. That certainty has launched a thousand think tanks and academic studies and embedded itself into every aspect of our law.

Rather than conduct a straightforward headcount of women and men in all aspects of life, this study looks at quality of educational opportunities, healthy life expectancy, and overall life satisfaction – and coverts this into a numerical value, the Basic Index of Gender Inequality (BIGI).

These three factors were identified as the minimal ingredients of a good life. Gender parity does not mean everything in life is rosy, say the authors. Men and women can be equally miserable, which will not show up on the parity rankings.

The study was carried out by researchers from the University of Missouri in the US and the University of Essex in the UK. The survey covered 134 nations, representing 6.8 billion people.

The researchers preface their findings by highlighting the limitations of other attempts to rank gender inequality by failing to look at areas where men are disadvantaged, such as healthy lifespan.

Interestingly, Bahrain comes out as the top country in terms of gender equality. Life expectancies between men and women are equal, though men fall slightly behind in terms of basic education and life satisfaction.

Israel is the highest ranking country in which men have it better than women, though the difference is small.

China is another country where men have it better. Chinese girls fall behind considerably in basic education, but men have a lower life expectancy (66 years, compared to 69 years for women).

SA deviates from most African and developing countries in that women have it better. This is particularly evident in education, where men fall considerably behind women. “In this regard, South Africa deviates much from many other sub-Saharan nations (where often girls fall behind). Further, men have a shorter healthy life expectancy (48 years for men and 51 years for women in the 2012-2016 period),” says the study.

This article first appeared in Moneyweb.

It was a bleak Christmas for nearly 8 000 Optimum Coal mine workers and contractors who were last paid in November.

The former Gupta mine was one of eight Gupta-owned companies placed in business rescue nearly a year ago after local banks withdrew transactional banking facilities, making it impossible to settle creditors and pay workers.

In a statement released on Wednesday, the business rescue practitioners (BRPs) explain the current cash crunch that made it impossible to pay workers for the last two months. The monthly wage bill is about R30 million, but the BRPs say the sale of Optimum and sister mine Koornfontein should be wrapped up in the next two weeks, at which point workers will be paid.

The BRPs have provisionally accepted a combined offer from the Project Halo consortium to purchase three companies (Optimum Coal Mine, Koornfontein Mines and Optimum Coal Terminal) at R3 billion plus post-commencement funding of R600 million. Project Halo also put in separate bids of R200 million for Koornfontein Mines, R2.8 billion plus pre-commencement funding of R600 million for Optimum, plus another R50 million for Optimum Coal Terminal at Richards Bay.

“That being said, the BRPs must emphasise that the decision of accepting the offer contained in the business rescue plans lies solely with the mines’ affected persons,” say the BRPs in a statement.

Read: Custody battle for Gupta’s orphan mines nears end

One of the BRPs, Louis Klopper, says solutions to the current impasse are being considered as a matter of urgency.

Optimum Mine workers staged protests outside Eskom and the mine itself earlier this week, demanding payment of their wages. The National Union of Mineworkers blamed the BRPs for workers going unpaid, saying they had violated the commitment to continue paying workers and creditors so long as there was production.

Klopper replies that a resolution of the cash crunch is imminent. “What people need to understand is the terrible condition of operations we inherited in February last year when we took over, and the work that had to be done to keep operations going.”

An agreement was concluded in March 2018 with Burgh Group Holdings to provide management assistance and the necessary transactional banking facilities. This was critical, as if this agreement did not come into being, the BRPs would have had no other option but to liquidate the mining companies in April last year.

The rescue practitioners had to defend or institute nearly 50 court cases over the last 10 months against entities that either tried to liquidate the mines (which would have instantly caused thousands of job losses), or entities and individuals linked to the Guptas that tried to frustrate the business rescue process.

The statement issued by the BRPs details how the Guptas nearly wrecked the mine and then diverted R90 million – and possibly much more – in Vat payments to fund operations. The Vat money was recovered after the BRPs obtained a court interdict. The Guptas failed to secure surface rights, drained cash away from essential maintenance in machines and mining operations, and failed to develop underground operations at both Koornfontein and Optimum, resulting in a section of Optimum being closed.

This article first appeared in Moneyweb.

If volatility is your thing, 2019 could be a great year. All the elements for a roller coaster ride are in place: an election in May, a trade war between the great powers, and the unresolved land expropriation issue.

It’s going to be bumpy, but not necessarily bad.

Bianca Botes, corporate treasury manager at Peregrine Treasury Solutions, paints a number of different scenarios for the year. They range from the good to the ugly: at its best, state-owned companies are turned into cash machines, land expropriation is handled sensibly, the global trade war resolves, SA’s credit rating improves and the rand strengthens to R10 to the US dollar.

That’s unlikely, certainly in 2019. Also unlikely is the worst-case scenario where SA goes the way of Venezuela with hyper-inflation; state-owned companies go bankrupt; land redistribution is mishandled, resulting in mass defaults on mortgage loans; capital flees the country; and business and consumer confidence is destroyed. Should that happen, expect the rand to go to R25 to the US dollar, says Botes.

A more likely outcome for the year lies somewhere between these two extremes, with the rand trading between R14 and R16 to the US dollar. That requires no serious shocks to the system, state-owned companies continue to muddle along in a generally poor state of financial health, the economy shows no real spark and outside geopolitical events remain volatile. In other words, pretty much like last year.

A slightly better outlook is also a definite possibility: finance minister Tito Mboweni gets a steady grip on state-owned companies and ratings agencies improve the sovereign rating by a notch, there is a gentle up-tick in the economy, interest rate changes are carefully paced, and land redistribution is handled sensibly and equitably. In this instance, the rand’s range would be between R11.50/$ and R13/$.

This article first appeared in Moneyweb.

Energy minister Jeff Radebe fired the entire board of the South African Nuclear Energy Corporation (Necsa), one of the few stable state-owned companies, apparently because there are plans afoot to sell it off to a US company.

That’s the claim made by several members of the previous board and outside energy specialists, who view with alarm the possibility that one area where SA is a world leader – in the production of medical isotopes for the treatment of cancer – may end up in foreign hands. The world is on the cusp of a nuclear medical revolution in the treatment of cancer, and Necsa is leading the way in this field. Global demand for nuclear isotopes is reportedly about to explode.

Necsa is one of the few state-owned companies that holds its own against the best-run private companies. In 2017 its NTP Radioisotopes subsidiary earned revenue of R1.3 billion, generated profits of more than R300 million and paid tax of over R80 million to the state. Necsa consistently wins clean audits from the auditor-general and has been lauded by the Institute of Directors for its governance.

How, then, did things apparently go bad so quickly?

Suspended members of the board contacted by Moneyweb questioned the minister’s claims of ‘defiance and ineptitude’ as reasons for the dismissals. This came just days after deputy energy minister Thembi Majola resigned due to “family commitments”. The suspended members of the board are bringing legal action to overturn the minister’s dismissal, saying he lacks legal authority to dismiss the board in the manner in which it is being attempted. He also appears to have ignored evidence that contradicts the cited reasons for dismissal.

Among the reasons given for the “precautionary suspension” of chairman Dr Kelvin Kemm, CEO Phumzile Tshelane and director Pamela Bosman were unauthorised foreign travel, dissemination of false information to the media, the months-long shutdown of the NTP medical isotope production facility at Pelindaba, and the “unlawful” signing of a memorandum of understanding with Russian nuclear healthcare company Rusatom.

NTP Radioisotopes operates the Safari-1 research reactor and is the world’s leading producer and distributor of medical isotopes. Every three seconds, someone somewhere in the world is receiving a nuclear medical isotope from NTP, wrote Kemm in a Business Report article earlier this year. This was in answer to an amaBhungane Centre for Investigative Journalism report questioning safety and other issues at the Pelindaba plant.

“SA has a world-leading nuclear medicine facility at Steve Biko Hospital in Pretoria, run by the internationally acclaimed Professor Mike Sathekge,” wrote Kemm. “The cancer therapy and diagnostics being performed there now are amazing. Quite mind-blowing. People who were supposed to be in their coffin are walking around; in fact, running around.”

It was this article, explaining in some detail the safety lapses at NTP and how the company had been acclaimed as the “best nuclear medicine company in the world” at Sochi in Russia in June this year, that was deemed by Radebe to be “dissemination of false information”. The minister appears to have taken exception to some “unsavoury inferences” that cast aspersions on the National Nuclear Regulator (NNR), which was depicted as wielding a sword in defence of the public. Kemm says these comments were intended as a compliment.

As to the question of unauthorised travel, Kemm says there was a moratorium on international travel imposed by the government. However, in 2016, Radebe’s predecessor Tina Joemat-Pettersson gave Kemm unlimited authority to allow Necsa executives to attend international conferences. Radebe seems to have been unaware of this.

“What we have achieved at NTP in terms of medical isotope research and production is a national treasure,” says Bosman, suspended director and head of Necsa’s audit and risk committee. “There is little doubt that what is being planned here is the sale of this national treasure to one of our US customers. That is why the board has been removed because we saw this coming and objected to it.”

The former board members say the sale of NTP was planned more than six months ago and needs to be stopped. It is no coincidence that the resignation of the deputy minister of energy and the firing of the Necsa board occurred within weeks of each other, says one.

One of the reasons given by Radebe for the board’s dismissal was the “apparent lack of leadership” in resolving the (temporary) shutdown of the NTP production facility.

This article first appeared in Moneyweb.

Three recent court judgments have radically altered the mining landscape. Two deal with the need for miners to engage with local communities and take a hardline stance on the eviction of locals, and the third slapped down the mining minster for allowing coal mining in an environmentally protected area in Mpumalanga.

The case that has perhaps the greatest import is the decision of the Constitutional Court to overturn an eviction order against 37 members of the Lesetlheng Community in North West Province to make way for mining on the land they had occupied for generations. The judgment in this case requires mining companies not just to consult with communities prior to commencing mining – but to also obtain the written consent of the individuals directly affected. This goes beyond what is required in many other countries, where consultation, but not consent, is sufficient.

Ancestral land

The occupants in the so-called Maledu case say their ancestors purchased the land in 1919 but were unable to legally obtain title due to previous racial discrimination, so the land was registered in the name of the minister of rural development, who held it in trust. Like many communities in SA, proving their title to the land is a complex and legally fraught issue. A separate case is underway to establish the ownership of the Lesetlheng community land.

The respondents in the case were Itereleng Bakgatla Mineral Resources and Pilanesberg Platinum Mines, both of which have mining rights over the area. They argued that they had complied with the Mineral and Petroleum Resources Development Act (MPRDA) requirement to consult with the Bakgatla Ba Kgafela community before mining and had received the necessary permissions.

But the 37 applicants in the case argued they formed a subset of the wider Bakgatla Ba Kgafela community, and it was their forebears who purchased the land, not the wider community. The wider Bakgatla Ba Kgafela community had no right to dispose of land rights that did not belong to it.

The ConCourt agreed, invoking a clause from one of the briefest acts on the statute book, the Interim Protection of Informal Land Rights Act (IPILRA), which says “no person may be deprived of any informal right to land without his or her consent”.

Mining companies’ sordid practice

According to community activists, mining companies in SA have a sordid reputation for playing off one section of a community against another to secure mining rights. This is what happened in another case brought by 128 members of the Amadiba community living in Xolobeni on the Wild Coast, who have fought a multi-year battle to stop the mining of titanium sands on their traditional land. Australian-owned Transworld Energy and Mineral Resources (TEM) has applied for the rights to mine a 22km coastal strip in the area. One faction of the community is in favour of mining, another is against it.