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Tue, 25 Jun 2024 Article

Mining needs more regulation, according to South Africans – survey

By Xichavo Alecia Ndlovu - The Conversation
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South Africa has large reserves of coal, gold, manganese and platinum.

It also has “critical” minerals and metals. Though there is no consensus on which minerals are critical, they are often referred to as those natural resources that are essential for the energy transition. The transition refers to the shift from fossil fuels to renewable energy sources to reduce greenhouse gases. The technologies needed to make this shift require certain mineral and metal inputs.

South Africa's critical minerals and metals list includes cobalt, nickel, copper, lithium and rare earth minerals. It has one of the largest reserves of graphite on the continent. In 2020, the World Bank predicted that demand for cobalt, lithium and graphite would have grown by about 500% between 2018 and 2050.

The Democratic Republic of Congo is the world's largest producer of cobalt. Zimbabwe is one of the top lithium producers worldwide.

In South Africa, the industry's economic contribution has declined, but it continues to play an important role in the economy and the lives of ordinary citizens. It employs over 400,000 people and attracts foreign direct investment into the country. It contributed over 6% to GDP, R90 billion (US$5 billion) in company taxes, and R14 billion (US782 million) in royalties in 2023.

South Africa has, since the dawn of democracy in 1994, been battling with how best to ensure that citizens benefit evenly from the extraction of natural resources. Various political parties, including the African National Congress and the Economic Freedom Fighters, have presented plans through their election manifestos on how to achieve this.

But little has been heard from citizens about the governance of South Africa's extractive industries. This article aims to address the gap. It draws from a recent survey by the Afrobarometer Research Network and my research on socio-economic development, political institutions, resource governance and energy politics in Africa.

Afrobarometer found that most South Africans favoured more government regulation of mining. My research also emphasises the role of citizens in holding the government accountable for ensuring that non-renewable resources are used for inclusive development.

These findings are important because minerals are expected to play a critical role in the energy transition over the next couple of decades. This role will mean that South Africa's mining industry, as well as the rest of the continent's, will play a significant role in the geopolitics of the energy transition.

Citizens support more government regulation

For the first time, in its most recent South African survey (Round 9/2021), Afrobarometer sought the views of citizens on natural resource extraction, such as mining, oil drilling, or wood harvesting. Figure 1 reports responses to four statements. Those who said they neither agreed nor disagreed or didn't know were classified as indifferent.

Most South Africans (61%) agreed that natural resource extraction should be regulated more tightly to reduce environmental impacts. Views on other questions were more mixed. For instance, 41% agreed that ordinary South Africans had a voice in decisions about natural resource extraction near their communities. Over half (58%) disagreed or were indifferent.

On whether local communities received a fair share of the revenue from resource extraction, 69% of citizens disagreed or were indifferent. Only 31% thought they received a fair share.

Finally, only 39% of citizens agreed that the benefits of resource extraction, like jobs and revenue, outweighed the costs, such as pollution. Meanwhile, 60% either disagreed or were indifferent.

It is clear that most citizens preferred more government regulation, but their views were more mixed regarding other equally important aspects of resource extraction.

These views may have to do with the mining industry's chequered history. Though it has contributed to development in several African countries, it was underpinned by the super-exploitation of cheap black labour.

Also, the mining of critical minerals like cobalt has been linked to human rights abuses, including child labour and human trafficking. It has been associated with health and environmental impacts too, like water pollution and crop contamination.

Does party affiliation matter?

The governance of the mining industry has been contested in South Africa's political debates for many years. It is necessary to consider how views on regulation differed among supporters of leading political parties.

Figure 2 analyses the relationship between support for more government regulation and respondents' party affiliation. Party affiliation was determined based on responses to the question:

If national elections were held tomorrow, which party would you vote for?

The uMkhonto we Sizwe party, which placed third in the 2024 national elections, did not exist when the 2021 survey was conducted. It is excluded from the analysis.

The top four parties in the 2024 national elections recognise the economic importance of the mining industry and the need to transform it to create jobs. However, their methods of achieving these goals differ, reflecting each party's economic and ideological stances.

The Economic Freedom Fighters' 2024 manifesto (like uMkhonto we Sizwe's) calls for state ownership of mineral resources through a state-owned company.

The largest party, the African National Congress, seeks to strike a balance between state intervention and private sector participation to transform the economy and create jobs.

The Democratic Alliance, a leading opposition party and member of the recently formed unity government, wants to remove state control and simplify regulations to attract private investment.

Nearly two-thirds of those polled wanted natural resource extraction to be regulated more tightly. However, 75% of respondents who said they were likely to vote for Economic Freedom Fighters called for greater regulation. This was 10 percentage points higher than African National Congress or the Democratic Alliance supporters.

Citizens may not know enough about extractive industries

The Afrobarometer survey suggests that citizens want the state to play a central and strategic role, whether through nationalisation, better oversight or other mechanisms.

But the percentage of citizens who disagreed or were indifferent (neither disagreed nor agreed, or did not know) about having a voice or the benefits of resource extraction is worrying. The response may imply that citizens aren't as well informed about the mineral resources industry as they should be. This has implications for their role in holding government to account for its regulation and the sector's impact on the environment. Accountability also extends to government's use of revenues it gets from natural resources extraction.

Citizens' ability to hold government to account will become even more important as the sector is projected to play a key role during the energy transition.

Xichavo Alecia Ndlovu does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

By Xichavo Alecia Ndlovu, Lecturer (Political Economy), University of Cape Town

Which team do you think has the higher chance of winning the 2024 elections?

Started: 02-07-2024 | Ends: 31-10-2024

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