Tuesday, January 15, 2013

With practice, SA can be a ‘lucky country’ too

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15 Jan 2013 | Tony Leon | Original Publication: BDlive

If our political leadership practises listening to and acting upon legitimate investor and industry concerns, we might get as 'lucky' as Australia, writes Tony Leon

THE famous description of Australia is "the lucky country". Superficially, this is a perfect characterisation for the world’s 12th-richest country, boasting vast resource wealth, hedonistic living standards and far from the world’s trouble spots, yet within reach of its major trading partners, China and Japan. But on a recent visit there, I was reminded of the crucial rider with which Donald Horne qualified this phrase in 1964: "Australia is a lucky country, run by second-rate people who share its luck."

Quite what Horne would have made of the current crop of Australian leaders is open to speculation. Prime Minister Julia Gillard’s disapproval rating of 48% slightly exceeds her 47% approval rating, while opposition leader Tony Abbott has the dubious distinction of enjoying 60% disapproval from the voters who could put his Liberal Party back in power later this year.

Yet in the smart suburbs of Sydney and in its gleaming and expensive shopping arcades and on its pristine beaches, an endless affluence and feel-good factor shrugs off the limitations of the country’s Lilliputian leadership. While in Australia, I could not but help contrast its prosperity and seeming indifference, even disdain, towards the political elite with our obsession with finding the local equivalent of Dostoevsky’s good Czar to lead us into a golden age. The media rapture here at the African National Congress’s canny move to install Cyril Ramaphosa as party deputy president mirrors our preoccupation with finding a leader to meet the challenges of the times.

Leadership, of course, matters at moments of crisis. The hinge of history could have swung very differently, for example, had Nelson Mandela and FW de Klerk not led SA in the 1990s, or if Winston Churchill and Franklin Roosevelt had not led the democratic pushback against fascism and Nazism during the Second World War. But in more prosaic moments of national and international affairs, it is arguable that durable institutions and sound policy matter quite as much — and, in Australia’s case, even more than the limitations of politicians.

Australia and SA have many things in common: mining and resources as a bedrock of national wealth is one of them. Despite a huge row in the "lucky country" at its government’s imposition of a mineral resource rent tax on super-profits of iron ore and coal mining, industry pushback there has cut the levy down to an effective 22.5%.

Despite the grumbling of the mining houses, which have yet to pay over a cent under the new tax, there is no suggestion there that the world’s largest mining company, BHP Billiton, will cut its exposure to Australia, or that its shares could be worth 20% more if it divested from the Antipodes.

The law might be unpopular but it provides certainty, makes no provision for a state mining company and is independent of ministerial whim.

Yet the local weekend headline was "Anglo pushed to quit SA". Not so long ago, for better or worse, Anglo American was SA and much of SA was, in fact, owned by Anglo.

Now the country with which the mining behemoth is most historically associated is seen by analysts as a drag on the corporation.

The first non-South African to head the company, Cynthia Carroll, made a hash of it, but greater things are now expected of her replacement, Australian Mark Cutifani.

Among his other virtues, Cutifani, when head of AngloGold Ashanti, at least reversed the flow of expertise from SA to Australia, where Helpmekaar and Pretoria University graduate Marius Kloppers heads BHP Billiton and another Australian and global mining giant, Xstrata, is headed from Europe by another South African, Mick Davis.

Then again, resource king Glencore’s Ivan Glazenberg is simultaneously both the richest man in Australia and SA.

But, of course, Anglo American is today neither headquartered in SA nor owned by South Africans. One former Anglo bigwig suggested to me that the company’s crisis of identity, too big for SA and too small for London, was part of its existential problem.

But while the estimable Cutifani ponders putting the company to rights, perhaps the South African government could lend a hand. There was such palpable relief when the ANC removed nationalisation from its recent conference resolutions that most people missed the Christmas package delivered on December 27 by Minerals Minister Susan Shabangu, more recently famous for her expensive bidding for questionable art. The detail of her draft bill amending the investor-unfriendly Minerals and Petroleum Resources Development Act suggests huge state control over the mining industry and even greater discretionary powers for ministerial intervention.

Perhaps if our political leadership now practises listening to and, crucially, acting upon legitimate investor and industry concerns, and vice versa, we might also get lucky. As Gary Player famously observed: "The harder I practise, the luckier I get."

Follow Tony Leon on Twitter: @TonyLeonSA


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