Global South African News Wrap 8 February 2013

Join us to be the change that you wish to see in the world State walks tightrope on mine taxes and jobs as commodity prices fall DA faithful cling to liberal roots as party searches for fresh blood NUM official warns workers against unreachable pay demands No chance of ban on teachers strikes Ramphele party launch may steal Zumas thunder Labour axed as farmers face soaring wages, costs

7 February 2013 Business Day Page 9 Michael Jordaan Join us to be the change that you wish to see in the world US AUTHOR Mark Twain used to say that "a lie can travel halfway around the world while the truth is putting on its shoes". Twain died in 1910, long before the era of instantaneous news coverage and social media, but today his words are truer than ever. I am, of course, referring to the exhaustive coverage that First National Banks (FNBs) "You Can Help" advertisement has received since it was first aired on January 17. Emotive words such as "treason" from one end of the spectrum, to "cowardice" on the other, were used in the debate. Amazingly (and despite all our best efforts to communicate), there is still a lot of confusion about the simple facts. There are often two sides to a story, and then theres the truth. Here is a factually correct version of the matter: FNB believes in the power of help to make a difference; the TV advertisement seeks to inspire all South Africans to help each other; there is nothing wrong with the advertisement; we have not apologised for the advertisement; and the advertisement is still being aired on TV and is available on YouTube. So what went wrong? To inform the making of the advertisement itself, our marketing team commissioned an independent company to conduct research into the opinions of the South African youth about our country. About 1,300 school pupils and university students were interviewed during this process. While about 70% of interviewees expressed optimism about South Africa, they were also sharp critics about areas for improvement. This is normal in any society and it is their right to express their views.

From these interviews, four video clips were linked to the "You Can Help" blog, including one that carried a negative comment about a Cabinet minister. None of the clips neither these four, nor any of the other clips gathered in the research were ever intended to become an advertisement. We certainly had no intention of playing politics, and there is no logic in FNB deliberately attacking the government or the African National Congress (ANC). When we were alerted to what was interpreted by the ANC as being "political statements" and "a personal insult" in the content of the four video clips, we immediately removed them. FirstRand CEO Sizwe Nxasana also apologised to the minister in question via SMS on January 20. On January 25, we met a senior ANC delegation to "clear the air". We repeated our apology for the posting of the video clips and the ANC expressed support for the actual advertising campaign and the sentiment of helpfulness that it intended to convey. Admittedly, I am sad that a campaign that was meant to inspire South Africans to make a difference has become so controversial, yet I remain extremely positive about our future and confident in the many well-meaning, hard-working people who want to help make South Africa a better country. As one commentator put it: "If we can come up with the worlds most innovative bank, then we can do anything." We just need to believe more in ourselves. We live in a truly wonderful country; one that is admired around the world. Yet, as South Africans, we sometimes forget what our great nation is capable of. One needs only look at our astonishing achievements to realise that, despite our past, we are a country that succeeds by turning adversity into opportunity. Our robust banking system has withstood the harsh pressures of the global economic crisis. SAs young scientists are positioned at the forefront of discovery with the construction of the Square Kilometre Array in the Karoo and surrounds. Our medical academics are now setting the benchmarks in the field of HIV/AIDS research and treatment, and although we may endure frustration at times, our sporting teams remain a source of national pride. It is clear, then, from these few examples, that we have so much to be proud of.

If we could just temper our cynicism with understanding and inform our judgment with a measure of patience, we will continue to prove to the world that the miracle of South Africa is alive and well. It is widely acknowledged that ideals rather than narrow profit motives drive the greatest companies. Further, ideals, defined as a principle or value that one actively pursues as a goal, are not tied to a particular business model and have no expiry date. This is powerfully endorsed by Jim Stengel in his 2011 book, Grow, after he conducted extensive empirical research on what makes companies successful. He says: "A brand ideal is a higher purpose of a brand or organisation, which goes beyond the product or service they sell. The ideal is the brands inspirational reason for being. It explains why the brand exists and the impact it seeks to make in the world." The companies he highlighted as the top performers operated according to these principles and generated a return on investment 400% greater than the Standard & Poors 500. FNBs brand ideal is help. We believe that help has the power to create a better world. To echo Anne Bernstein, founding director of the Centre for Development and Enterprise, "business is a fundamental part of society and has an intense interest in society being successful". This belief in long-term sustainable growth over a restricted definition of business purpose has long been at the heart of the way FNB thinks and acts, and is evident in initiatives such as our investment in Soweto in the early 1980s, with the building of FNB Stadium. We are founding sponsors of the Homecoming Revolution and SA: The Good News, as well as having been a bid sponsor and the first African firm to sign up as a national supporter of the Fifa 2010 World Cup. Understanding that a better society is a side effect of doing good business, FNB has always sought to transcend mere product advertising and seek instead to fill South Africans with pride, raise their morale and remind them of their own value as some of the most passionate, compassionate, proud and helpful individuals in the world. To this end, you may recall our previous "Anthem", "Lost Dog" and "Praise Singer" advertisements. So convinced are we of the huge potential for nation-building inherent in simply helping one another, that FNB will continue with its "You Can Help" campaign.

Our belief in its message of help and its role in building a better SA, which first inspired the campaign, remains firm. If you believe, as we do, "that you must be the change you wish to see in the world", join us in helping help happen. It is tougher than being critical, but a lot more fulfilling. Jordaan is CEO of FNB. 7 February 2013 Business Day Page 12 Bloomberg State walks tightrope on mine taxes and jobs as commodity prices fall THE government faces a dilemma: how to help mining companies weather surging costs and depressed commodity prices as the ruling African National Congress (ANC) seeks to wring more revenue from the industry. Upheaval has plagued platinum and gold producers since August last year, when thousands of workers staged a series of illegal strikes, winning pay increases of as much as 22%. Adding to mining costs, Eskom, which supplies about 95% of South Africas power, is seeking 16% average annual tariff increases until 2018 to fund expansion. While Mining Minister Susan Shabangu says the government is committed to working with the industry, the ruling ANC wants the country to derive greater benefit from its minerals. At a conference in December, the party said a "resource-rent" tax, or higher royalties, were under consideration. "Im quite worried," Nick Holland, the CEO of Gold Fields, Africas number two gold producer, said in an interview on Tuesday at the Mining Indaba, a gathering of more than 7,500 industry executives. "We can ill afford to accept any taxes beyond what we have. Its just going to increase the speed of the decline of the mining industry." Mining output slumped 11% on a seasonally adjusted basis in the three months through November from the prior three months, government data show. Nine loss-making platinum mine shafts were shut in the second half of last year, according to the Department of Mineral Resources, while Anglo American Platinum, the largest producer, last month announced plans to idle four shafts, which may result in as many as 14,000 job losses. The government needed "to more get involved in discussions with mining on what we do, how were doing it, without jumping to conclusions," Harmony Gold CEO Graham Briggs said in an interview on Tuesday. "If you meet and

you understand and youre not on opposing sides of the table, you can be quite successful." Platinum has fallen 26% since reaching a record high of $2,301.50 in March 2008 as a global economic slowdown crimped demand from car makers, the biggest consumer of the metal. Platinum has gained 11% this year while gold has advanced 0.1%, insufficient to compensate for rising input costs. "We have seen several years in which levels of demand for platinum have fallen significantly short of the industrys expectations," Cynthia Carroll, the departing CEO of Anglo American, which controls Anglo American Platinum, told the conference this week. "At the same time, costs have continued to rise relentlessly. This is an industry in crisis. And the near-term future shows no sign of respite." South Africa has the worlds largest known reserves of platinum and chrome, and is the continents biggest gold producer. The mining industry directly employs about 500,000 people, makes up about 9% of gross domestic product and accounts for two-thirds of exports. At its national conference in December, the ANC rejected proposals to nationalise mines in favour of a tax review. Since March 2010, mining companies have paid royalties tax based on sales in addition to income tax, with the rate varying depending on the type of mineral. "We have got a very efficient tax regime here," Peter Major, head of mining at Cape Town-based Cadiz Corporate Solutions, said in an interview on Tuesday. "I just dont understand why the government would want to change that. The problem here is they are just not getting enough from taxes because the companies arent making enough money." While the ANC drew up policy frameworks, the Treasury would ultimately determine what taxes the mining industry should pay, Ms Shabangu said. "It cant be a given" that taxes would go up, she said in an interview on Tuesday. Last month, Finance Minister Pravin Gordhan said there would be no imminent changes to mining taxes. 7 February 2013 Business Day Page 3 Setumo Stone DA faithful cling to liberal roots as party searches for fresh blood

FOR core supporters of the Democratic Alliance (DA) it matters that the party maintains its liberal values an issue that is the subject of intense debate due to escalate ahead of next years general elections, and in the race to replace party leader Helen Zille in three years time. National spokesman Mmusi Maimane recently got a tongue lashing from Gareth van Onselen once regarded as one of the DAs leading thinkers for his attempt to define what it means to be African. The main gripe was that the DAs founding values would be diluted if that sort of talk was not properly anchored in liberalism. The African National Congresss (ANCs) attack on DA parliamentary leader Lindiwe Mazibuko prompted the debate. The governing party said Ms Mazibuko was "un-African" after she criticised President Jacob Zumas comments that businesses that support the ANC would prosper. Mr Maimanes logic is that if the DA does not offer an alternative vision to voters on the meaning of Africanism, "then the ANC will get away with defining African as black, and consequently position itself as the only home for black voters". Those worried about the DAs direction and seemingly its next move when Ms Zille steps down are uncomfortable with what they see as an erosion of the DAs liberal values, particularly as a result of new entrants coming into the party with diverse ideas and assuming positions of responsibility. The DA has been growing its membership swallowing politicians from smaller opposition and bringing young black leaders up in its ranks. This trend will have an influence on the sort of leader likely to emerge after Ms Zille. Those close to the internal ramblings view the clash of ideas as early signs of a brewing contest for Ms Zilles seat, with Mr Maimane and Ms Mazibuko seen to be positioning themselves as natural successors when the party goes to its next federal congress in 2015. What would work in favour of both Ms Mazibuko and Mr Maimane is that the DA is aware that its only chance to topple the ANC, or even come close, is with a credible black leader at the helm. Ms Mazibuko would be aware that her name has been touted in some quarters, including the media, as a potential successor to Ms Zille. The DAs 2011 municipal elections poster, which features the trio of Ms Zille, Ms Mazibuko and Cape Town mayor Patricia de Lille, may have been intended to demonstrate that the party was committed to nonracialism. But the poster also managed to firmly position Ms Mazibuko among the faces that strongly represent the DA brand. Mr Maimane has enjoyed a similarly mercurial rise in the DA ranks, making him a serious contender. Among Mr Maimanes sympathisers, the criticism of

his views has been seen as an attempt to weaken his chances as a potential contender, and thereby give Ms Mazibuko the edge. Ms Mazibuko says anyone who intends to run for the DAs top post will have to do so based on how they have delivered in their previous role as well as their vision for the future of the party. However, part of the DAs problem with its succession plan is Ms Zilles failure to lure Mamphela Ramphele into the party. Ms Ramphele was seen as Ms Zilles possible replacement, but is expected to launch her own party. The same goes for failed attempts to sweet-talk Trevor Manuel into ditching the ANC. And if the claims are true, the DA may have also tried to win over Zwelinzima Vavi. Mr Maimane says the debate on the DAs values is healthy, as it "stretches mindsets", promoting thought over belief. Ms Mazibuko agrees, adding that debates cannot always be framed as proxies for a leadership succession battle. "That is ANC politics," she says. Mr Maimane says the DA is a federal organisation and individuals are allowed to contest and canvass opinions. The party is "a house big enough" to accommodate multiple views, he says. "There have been enough leaders who have come to the defence of what we stand for," says Mr Maimane, who is also the DA leader in the City of Johannesburg. Asked if he still sees himself leading the DA in a bid to win over the City of Johannesburg in the 2017 municipal elections, he says: "A lot can still happen between then and now." Ms Mazibuko shares a similar sentiment. "Things change very quickly in politics," she says. In the spirit of ubuntu espoused by the ANC, the greater good of the collective is regarded as superior to that of the individual. But liberalism has individual rights at its core. Which route will the DA pick? Answering this could make the next federal congress a battle for the soul of the party. 7 February 2013 Business Day Page 3 Natasha Marrian NUM official warns workers against unreachable pay demands ANTICIPATING a year of tough negotiations in a difficult economic climate, the National Union of Mineworkers (NUM) on Wednesday warned members against submitting demands that were unreachable.

The NUM landed in hot water last year after workers in Rustenburg opted to sidestep the union in wage talks, which resulted in a fatal clash with police at Marikana, in which 34 people were killed. The NUM is holding a two-day bargaining conference in preparation for wage talks in several sectors, including gold and coal. NUM deputy president Piet Matosa said the conference was of grave importance, and that its work this year went to the very heart of the unions survival. The gathering comes as the NUM moves to regain ground after the wildcat strikes in the sector, during which workers largely rejected the Congress of South African Trade Unions affiliate in favour of splinter union, the Association of Mineworkers and Construction Union (Amcu). Mr Matosa warned mineworker leaders at the conference in Midrand that it is going to be very difficult for the NUM in some regions to talk to members, to get a mandate. He was speaking as mine bosses gathered in Cape Town for the annual Mining Indaba. Mr Matosa accused outside forces of wanting to compromise the NUMs mandate-seeking process. This process was central to the NUM regaining the ground it lost in Rustenburg its largest, most influential and also most troubled region over the past year. They want to instil fear and submit demands that are unreachable be careful of submitting demands that are unreachable, he said. The negotiating climate would be hard, with mining companies threatening to retrench workers, and with the unbundling of Gold Fields, as acquisitions and mergers often lead to job losses. Anglo American Platinum came under fire from the government and the African National Congress last month after it announced plans to restructure. It has since shelved the plan for now. The NUM was aware of the fine balancing act it was tasked with, needing to manage the expectations of the public, its members and investors. Further, it was aware of the damage caused by unions failing to listen to, and take forward, their members demands. There must be a mandate-seeking process; this process must not be compromised , he said. During this years bargaining process, the NUM would steer clear of the approaches that could land it in trouble with its members including being open to across-the-board wage increases. Mr Matosa urged workers to protect the union against attacks, and to close the perceived gap between union leaders and members.

If we lose this year, I dont know what is going to happen to us, this is about the future of our union. The NUMs negotiator, Ecliff Tantsi, said it would not ignore the new kid on the block, referring to Amcu, as the union strategised for the year ahead. 7 February 2013 Business Day Page 1 Carol Paton No chance of ban on teachers strikes THE African National Congresss (ANCs) proposal that education be declared "an essential service" has no prospect of succeeding, according to experts. It will be illegal in terms of the Labour Relations Act and unworkable even if allowed, based on the total failure to enforce essential services provisions in other sectors. The ANC will have to go back to the drawing board in its attempts to regulate teachers. It has no option other than to continue the protracted negotiations of recent years with teacher trade unions to modify their behaviour by agreement. The Congress of South African Trade Unions and two of its public service affiliates, the South African Democratic Teachers' Union (Sadtu) and the National Education and Health Workers Union, have shot down the ANC proposal. They took cover under the Labour Relations Act, which defines essential services as those "the interruption of which would endanger the life, personal safety or health of a whole of part of the population". This definition is based on that of the International Labour Organisation (ILO), whose conventions the government endorses. The ILO has ruled that education is not included in this definition. The South African Communist Party has since suggested that the term "essential service" be dropped from the discussion. ANC secretary-general Gwede Mantashe has refined his comments to say what the party was really seeking was an "attitudinal" change among teachers. Labour lawyer Anton Roskam, of Haffegee, Roskam and Savage, said on Wednesday that apart from it being impossible to declare education an essential service, any attempt to limit teachers right to strike would have to comply with the constitution.

Sadtu general secretary Mugwena Maluleke said the union had requested a meeting with the ANC to discuss the issue, but it was inconceivable that it would enter into any voluntary agreement to limit the right to strike. "The strike is the only weapon that workers have. "It would make no sense to agree to limitations on that." The government had recourse in the event of unprotected labour disruptions. It could take disciplinary action against the involved teachers, Mr Maluleke said. "Why do they need another law, when in fact they are not enforcing the one that they have?" Mr Roskam said protected and procedural strikes in the education sector in the past 10 years were few "and hardly an issue". The problem was that the employer was not enforcing the Labour Relations Act. The focus on essential services has highlighted the failure of the provisions of the Labour Relations Act so far to regulate strike activity. This is particularly the case in essential services. The result has been that essential services workers such as nurses, doctors, some municipal workers, and employees essential to electricity generation and distribution have in recent years gone on strike regardless of the law. Mr Roskam has written several research papers on the problem and has proposed amendments to the act. The issue of essential services was fraught with challenges, he said. The essential services committee, brought into being by the act, had to name sectors to be declared essential services. Then workers and employers in the sectors should draw up a collective agreement that specified who had to remain at work during a strike. But in the past 17 years, only one such agreement between Eskom and the National Union of Metalworkers of South Africa was concluded. "This agreement has since collapsed and I dont know of a single one that is in effect," Mr Roskam said. The result had been that sectors that had been declared essential services tended to "ignore the law and go on strike". 7 February 2013 Business Day Page 1 Sam Mkokeli

Ramphele party launch may steal Zumas thunder THE launch date of academic Mamphela Rampheles political party could be on Tuesday pre-empting President Jacob Zumas opening of Parliament next Thursday. News of her political party has ignited a fire in academic circles, with lecturers and intellectuals excited about the prospects that it will be launched in time to contest next years general elections. While the 2014 polls are seen as the first step in planting the party on the political landscape, the 2016 municipal elections are regarded as a real opportunity for it to win a substantial slice of the electorate. The initial plan was for Dr Ramphele to lead the way, and then hand over to a younger team ahead of the 2019 elections. People advising her on the establishment of her party would not confirm the launch date on Wednesday, saying only it would be "soon". The launch was initially planned for the University of Pretoria, but the venue has since been changed to Constitution Hill, said a source close to Dr Ramphele. She has said she is not denying speculation that she is about to launch a political party. "I would like to place it on record that I have been having conversations with South Africans from all walks of life about the state of democracy in South Africa, canvassing their views about ways in which South Africans can work together to tackle our pressing social, economic and political challenges," Dr Ramphele said last week. These talks were in line with the national dialogue she was seeking to promote through her latest book, Conversations with my Sons and Daughters, she said. "I have always been clear in articulating my views on matters of public importance and will speak on my own behalf about any decisions I might take about my future engagements," Dr Ramphele said. On Wednesday at the Mining Indaba in Cape Town, she answered questions about her party with, "Just wait patiently." She is expected to capitalise on her grassroots activism, mainly driven by the Citizens Movement a nongovernmental organisation that, among other things, is aimed at cultivating an active citizenry. 7 February 2013 Business Day

Page 1 Alexander Parker Labour axed as farmers face soaring wages, costs AT LEAST 2,000 farm workers were issued with retrenchment notices on Wednesday as the agricultural sector shed jobs ahead of the implementation of a new minimum wage, and as mechanisation on farms gathers pace. Agriculture has shed hundreds of thousands of jobs since minimum wages were first implemented in 2000. Analysts warn that thousands more will be lost when the new wage increased by 50% by Labour Minister Mildred Oliphant comes into effect on March 1. Industry insiders warned on Wednesday that mechanisation on farms had begun some time ago and was picking up pace. Farmers in Limpopo and Mpumalanga and milk producers were said to have started serving workers with retrenchment notices, but Western Cape farms were quiet with no reported threats of dismissal. The reaction of farmers to the new wage has been most marked in Limpopo, where Agri South Africa said 730 workers had been given notice in Georges Valley and Magoebaskloof. Farmers in Mpumalanga have said they would follow the Magoebaskloof example and cut back on labour. The move to mechanise has lit a fire under farm implement sales. Last year was "exceptional", said Agricultural Machinery Association secretary Jim Rankin. "We sold nearly 8,000 units," Mr Rankin said. About 60% of those machines were tractors. He said, however, that the mechanisation of South Africas farms was "a process, not an event". Over the past three years, the farm machinery industry had outperformed each year by 50%, he said. In 2003, there were 3,200 units of agricultural machinery sold in South Africa, and by last year nearly 7,800 units were sold. Mr Rankin said this was evidence of a "mechanisation impetus" in agriculture, despite the fact that "the area under cultivation in South Africa has, in fact, reduced". He expected farmers to look more closely at mechanisation "in the light of the last six months" during which workers went on strike and unions demanded big wage rises but said the process "started a long time ago".

Johan van der Merwe, MD of Northmec, a leading tractor and machine distributor, agreed on Wednesday that business was very good. "Were expecting a very good year," he said. Callie Human, the head of sales and marketing at agricultural equipment distributor Argo Industrial, described the market in the past six months as "quite lively", but he pointed out that some sales could be attributed to "good commodity prices on the grain side". Farmers were abandoning labour-intensive sectors to focus on those that were easily mechanised, Transvaal Agricultural Union of South Africa chairman Louis Meintjes warned on Wednesday. He described the past few months as a "tragedy", but asked: "What can farmers do? We started to mechanise some time ago, to get rid of labour, or to move to another sector." Mr Meintjes warned that farmers were being squeezed "from all directions", citing the cost of electricity, the price of diesel, taxes and the cost of labour. As a result of new minimum wages for farm workers being set at R105 a day, farmers in Limpopo and Mpumalanga had issued notices of retrenchment to their workers "in order to survive". "Our information is that at least 2,000 workers have received notices. Its done on a financial basis for survival. The minister put us in this position," he said. The flight from labour-intensive agricultural practices had already severely affected the price of foodstuffs such as vegetables produced in a manner that cannot be mechanised, Econometrix chief economist Azar Jammine said. "This will be inflationary. Fruit and vegetable prices have already risen more than other foodstuffs," he said on Wednesday. Mr Jammine said there had been extensive shedding of jobs on farms since minimum wages were introduced in 2000. According to the old labour survey methodology, the sector shed about 700,000 workers between 2000 and 2007 from 1.84-million employees in 2000 to 1.16-million in 2007. Mr Jammine said the decrease was attributable to the implementation of minimum wages, although "some might say that the broadening of the social grant net would have had an impact as well". He warned the new minimum wages were a "classic knee-jerk blunder" that would act as a "counter to land reform". This was because "only the big commercial farmers will survive, and emerging farmers will struggle", Mr Jammine said.

Congress of South African Trade Unions Western Cape secretary Tony Ehrenreich said on Wednesday several government incentives and schemes existed to help farmers retain their workers, but "some old farmers" wanted to carry on paying "slave wages". No farmers had taken up the offer of a reprieve from the minimum wage, the Department of Labour said.