Daphne Mashile-Nkosi - CEO, Kalagadi Manganese, South Africa HARDtalk

Welcome to HARDtalk, with me, Zeinab Badawi. I am here in Johannesburg,

at the home of the only black woman in South Africa to head a mining

company. Daphne Mashile-Nkosi has made a fortune out of her business

ventures. But the mining industry in South Africa is beset by strikes

over pay and conditions. How far has South Africa's mineral wealth

benefited its poorest people? Daphne Mashile-Nkosi, welcome to

HARDtalk. Thank you very much. Thank you,

Zeinab, for inviting me. In his State Of The Nation address

in February, President Jacob Zuma said South Africa needs a mining

industry that is working. It isn't, is it?

Yes, it isn't. There's a lot of challenges. Most of the challenges

in the mining sector are still to come. If you look, South Africa has

always been a mining country, mining is the backbone of this country.

It is a country very rich in natural minerals and resources.

Well endowed with mineral resources. What we are referring to here, ever

since Marikana, August 2012, 44 striking miners were fired upon,

ongoing enquiry going on. Even before that, there's been a great

deal of bad press for the mining industry. Striking workers because

they feel that they are not enjoying the proper benefits they should be

for their hard work. Yes. I think that the model that was

used in the mining sector for decades was a wrong model. And the

dawn of 1994, liberation, people beginning to look at their rights as

individuals. The benefits in terms of what you put in is what you must

get out. They realised, there was an awareness programme, recognition

that we are actually not getting enough. That the risks, in terms of

being on the coalface, deaths in the country. And from a health and

safety point of view, the government has actually come with very good

policies. I should say at the outset that you

are a member of the ruling African National Congress, the ANC. But

things actually have not got any better. Let me give you one example.

One man of about 40, he works in Paarl platinum mine. And he has got

nothing to show for his years and years of hard work. He's got a

family to support. And he told Reuters in an interview in February,

he is a striking miner, "We have had this African National Congress, ANC

government, for 20 years. But we are still slaves." Is what he says.

Remember that the ANC does not own the mining companies. The mining

companies that we are talking about are mining companies that have been

there for decades. The reason I have brought that up is

because you said, since 1994, when we have had the ANC government which

is trying to do something. And I am trying to put to you that, actually,

just one example of many, saying things aren't any better.

Well, I think that things have actually gone better. And I can

actually substantiate what I am talking about. Before 1994, black

people weren't even allowed to start businesses. Or even get into a bus.

There were white buses and black buses. That's the first point. Come

1994, we have the Labour Relations Act that actually at least gives

employees a voice. First of all, you can't just dismiss a worker. You

have to go through a process. Secondly, the benefits they actually

get, there's regulations attached to that.

But that's the whole point, Daphne Mashile-Nkosi. The miners are

striking in their thousands, and have been for some time. They make

deals here and there sometimes. In the gold and platinum mining

industry, they say they are not getting proper pay., Conditions of

awful. We work in hot, stuffy, cramped conditions, the

accommodation we have is absolutely awful. That is why they are going on

strike. If things were fantastic, they wouldn't be, would they?

Well, I have never heard or seen of any country where things are

fantastic. They are saying, look, give us a

living wage. And the mining companies say, we can't afford that,

that's what the bosses are saying. Who is right?

I don't know who is right, but what I do know is that the government

does not look at miners only. We have a whole range of different

segments of society. We have doctors that have to earn a living wage. You

have professionals that have to get a living wage.

I mean, one consultant from the Africa Practice Consultancy says it

is critical that the labour unrest issues be resolved, and that the

mining companies should adopt a proactive strategy in terms of wage

negotiations. For somebody like him, and many agree with him, the onus is

on the companies. It is the company bosses, Daphne, who earn the

millions and millions of dollars every year, some of those right at

the top. I think I agree with you. But,

remember, the mining-related problems did not start when the ANC

came into power. There are generations of big companies listed

in London and all over the world having, not only in terms of paying

people, but their rehabilitation. Contamination of communities. The

housing. So, it was just something that was about to happen. Marikana

was a time bomb that was about to happen. You needed something just to

push you just a little bit. It didn't start in 1994. It has always

been there. The problems, obviously, did start

way before the ANC government in 1994. But things are not being fixed

now. Let me give you an example, Sandile Zungu has said, he's the

Secretary-General of the Black Business Council. He said: The

mining migrant labour system is apartheid's worst legacy. It has

broken up South African working life. Migrant labourers in the

mining industry, it is a tragedy, it is something which still goes on.

Yes. And that is why you look at the Mining Petroleum Resources Act 1995,

which prescribes that new entrants into the mining sector do provide

government with a plan. It is called a Social And Labour Plan. What does

that mean? It means, before you can be awarded the mining rights, or the

permit to mine, you need to give the government a social plan, in terms

of what is it you are actually bringing into the communities around

where you are going to mine. What is it that you are going to do in terms

of contributing towards social infrastructure in that particular

area? So, what are you doing? You run, you

set up in 2001, Kalahari Resources. Then, in 2006, you set up Kalagadi

Manganese Mine in Northern Cape. You employ about 3,000 people. What are

you doing to develop the community? Look at the Northern Cape. There is

no electricity. There was no electricity in the Northern Cape. No

water, it's almost a semi-desert. I had to pull water one kilometre, to

bring it to the mine. Along the way, the community was benefiting in

terms of actually getting the water. You are trying to bring

infrastructure and meet the community needs.

I have pulled in infrastructure. And that has been recognised here in

South Africa. In terms of housing, Because of the

migrant labour system, most of the people would be taken from

Mozambique, Lesotho, and they would only see their families...

Even in South Africa, there are migrants? So do you employ migrant

labour in your mines? For instance...

Do you? We don't have migrant labour

anymore. Not at the moment. Within South Africa itself, people

who leave their families in rural communities, uprooted. Families are

left broken up. 80% is prescribed by the department

that you must utilise local labour. As new entrants, we have a better

responsibility, and better chance of redressing the imbalances of the

past. So you say, I, Daphne Mashile-Nkosi,

in my Kalagadi Manganese Mine, I have no migrant labourers? Well, I

do have people who are coming from other parts, but 80%... And give

them decent accommodation? They have decent accommodation.

What do you describe as decent accommodation?

It is a room with a toilet inside, a table, a study, a bed. Air

conditioning because the environment is very harsh. In terms of my Social

And Labour Plan, I have made a commitment to build 300 housing

units within the local area. So that we want to attract professional

skills and local people that can bring in their family.

What do you pay your workers? As I indicated to you, I am still in

the construction phase. I will only start production in August.

What will you pay them? We will pay them a living wage. You

need to look at what the industry is paying. You remember, I am not the

only miner. There are juniors, seniors, there are companies with a

lot of experience. So all the bosses gang up together

and say, we mustn't pay too much because we've all got to work

together and make sure that the workers don't get too much. Is that

what you are saying? I think South Africa is different,

though. In the sense you have the unions negotiate. Where labour,

where government, where everybody goes there. And actually we have the

bargaining chamber, all sorts of structures. The Chamber Of Mines

also representing the industry. So, you won't set a good example and

say, I, have decided I need to lead by example. I want to make sure my

miners get what they think is a good living wage.

I am already a very good example. Let me give you reasons why I am a

good example. The fact I have built an 18.6 kilometre rail line. I have

pulled electricity 70 kilometres. And, when I was pulling the

electricity, you have to put in a double line. I only used a single

line. The other line I actually utilised for the community. I did

that deliberately. Remember, as of now, I am not generating revenue. I

had a responsibility, and I knew that, for me, to change the mining

sector, it is for me to do it and to become a very good example.

The broad argument underpinning what we have been discussing so far is

essentially this. The Mineral And Petroleum Resources Act 28 of 2002

states that mineral and petroleum resources belong to the nation. And

the state is the custodian thereof. Therefore, if these natural

resources are part of South Africa's natural riches, why is it just a few

who benefit disproportionately, compared to the many?

I don't agree with that, and I'll tell you why. First and foremost, we

have had minerals for many, many years, millions of years. If they

remain in the ground, their development, the money, the

employment opportunities will never happen, because you need a

partnership. A partnership of investors that are prepared to put

their money. Because you don't just wake up one morning and take a spade

and go into the ground and take the minerals. You need to invest in

infrastructure. So that you can you can take out the manganese. Before

you can take out the manganese... But the ratio of investment to

reward for some people has become too skewed, when you find that a few

are benefiting to the tune of multi-multi millions of dollars. And

then you have just got some just earning a handful of hundreds of

dollars doing the real work at the coal face.

I think it's only fair that South Africa decides which route they want

to take. If they want to privatise, they can do that. If they want to

give it to the nation for people to do that, they can do that.

That is exactly what some people are saying should happen. Julius Malema,

a former youth ANC youth wing leader, has now set up a new party,

the EFF, the Economic Freedom Fighters. They say, let us

nationalise South Africa's mines. It doesn't make economic sense. What

makes economic sense for me is that I applied for a mining right, I paid

to get the mining right. But I didn't only do that. I spent three

years of exploration, three years. It has taken me 14 years. Since

2001. Still in 2014, I have not made a cent. You have people who are

entrepreneurs. You have people who are business people. People who are

investors. People with foreign direct investment, for instance.

That is what we are talking about. It is money that we require in the

country to increase what this country needs in terms of the social

spending that we need. All right. Looking at a related

issue, when you talk about investment. When the ANC government

came to power in 1994, one of its key strategies was what was known as

black economic empowerment, whereby white-owned businesses, and they

were mostly white-owned, would give up a small share of their assets to

black economic empowerment ownership. And that has resulted

with a small number of black people in South Africa becoming

fantastically rich. And people say, hm, I wonder why that is the case?

Can I ask you, have you been a beneficiary of black economic

empowerment? I have never been. Yes, I have, I am

a beneficiary of black economic empowerment. Not a free rider. In

terms of legislation that allowed me, as a black person, to start my

own business. That is how I have benefited.

Black economic empowerment is not about those that actually get shares

from white owned companies and do not pay for them. The legislation

does not say that. If you are given the opportunity to bring black

people into your business, they raise their own cash. And you ask

them to raise the capital, and they pay it back. So it is not a free

ride. But the general point being made by many, not specifically about

you, Lawrence Mavundla, president of the National African Federated

Chamber of Commerce and Industry, said the programme of black economic

empowerment and preferential procurement has promoted business

people who got their tenders through political connections, ie the

members of the ANC. Is that true? I think I agree with him on that. I am

not a tenderer. And you accept that you and your late husband, Stanley

Nkosi, were ANC stalwarts. Of course. He was imprisoned in the

mid-'70s. He was imprisoned with the current deputy president, Kgalema

Motlanthe, and you yourself were an underground operative for the ANC.

But that does not preclude me from having opportunities in South

Africa. Let me give a perspective. I am very proud of my history and

background, but I actually worked very hard, sacrificing my life. My

husband sacrificed his life as a lawyer, fighting for the rights of

the millions of this country who did not have a voice at all. Come 1994,

it does not necessarily mean that because I was an activist, therefore

I cannot take opportunities that are there for the taking. First and

foremost, I don't have tenders. I don't do tenders. Every bit of

opportunity that I have had, I have grabbed it with both hands. I have

dirtied my hands. I have raised my own capital. Because you have a very

impoverished background. In a sense, you are almost a rags to riches

story. I am a rags to riches story. And I was shaped not by 1994, I was

shaped by the environment and the effect that I was poor. I didn't

want my children to go through that. Having said that, I don't think it's

wrong for me to be in business. I'm very proud of my ANC connections,

and the ANC recruited me when I was a student because there were so many

wrongs and I was intelligent. I was expected to write in Afrikaans.

Afrikaans was shoved down my throat as the medium of instruction, and

that's when I started to become an activist. You have been applauded.

You are a community worker. Yes, I have paid my dues. You worked in the

Women's Development Bank Trust and then the loan office in the Women's

Development Bank and you set up an IT company in 1999 and set up a coal

mine. You are an entrepreneur and a hard-working woman. But I really

just want to raise this issue of black economic empowerment and where

it is and how you feel as somebody who has benefited from it, by your

own admission. It was set up to prevent the exploitation of South

Africa's natural resources by foreign companies and there is a

mandatory 26% black economic empowerment ownership agreement to

be achieved by this year. But people look around and they see, for

example, Cyril Ramaphosa, ANC through and through, who was being

groomed at one time by Nelson Mandela as his successor. One of

South Africa's richest people. Worth about $700 million. And Cyril

Ramaphosa is partner with Glencore, the big mining giant. So people look

and think "Hmm, we wonder who black economic empowerment is actually

benefiting". Do you accept that that criticism is valid? I think I accept

the fact that BEE did not achieve what it set out to achieve. That, I

can accept. I can't run away from that. But the point is that if you

start doing something, it is almost like a dog. A dog doesn't bark at a

car that is standing, but as soon as the car starts to move, the dog will

bark at it. So we can't sit back and say there was nothing before 1994.

We needed something that will actually...if, for instance, human

nature did dictate that when people recognise the fact that they have to

do something for other people, they do it, we wouldn't have had BEE. But

it is just how far. You yourself say you put in your own money, but you

also benefited from the Industrial Development Corporation, the IDC, of

South Africa. No. I started with my own money. When I was bankable, I

went to the IDC. They took my shares. They gave me money. There

was value in my company, and they bought 10%. Let's qualify that. One

final point on black economic empowerment. Even the current

finance minister of South Africa, Pravin Gordhan, says that black

economic empowerment policies have not made South Africa a fairer or

more prosperous country. And that is the point. People say you have

worked hard and earned your own money and you should benefit, but

the question is, by how much? And there is too much inequality now in

South Africa. It has even overtaken Brazil as a more unequal country. So

yes, you can benefit, but not so much compared to the poorer person?

Well, I think he is correct that BEE has not done what it was expected to

do. Having said that, the government of this country has gone forward. --

it has gone back to the drawing board. For instance, legislation is

one area. Regional integration is another. Beneficiation is a story

the government is selling so the downstream value chain can benefit

ordinary people. I want to ask you this on mining. You have said it is

the backbone of the South African economy, but there are people like

the political economist Moeletsi Mbeki, brother of the former

president Thabo Mbeki, who says this overdependency on mining is not good

for the South African economy. We have neglected the manufacturing

base in this country. It is actually shrinking. He says the reason for

that is mainly because the ANC government, since it came to power,

has been diverting resources from the production sector through the

tax system to government consumption and government salaries, and

therefore the private sector has no funds to invest in manufacturing.

The South African economy cannot be an aeroplane flying on one engine. I

agree with him. That was not him talking about the engine, that was

me. The point is, you need manufacturing, not just the mining.

I agree. That is why I'm manufacturing. I don't sell an ounce

of ore. The operation plant is the crushing of the manganese. They have

built the largest manganese plant in the world. It's processing the

manganese. I am shipping out the ore, which therefore means that I

export low-income commodity, which is ore. And then you re-export the

manufactured finished version. South Africa...he is correct, and I will

give you reasons. Briefly, steel-making. Infrastructure needs

steel. All the ingredients of making steel are here. But we still import

steel. So you are one of the rare miners who just doesn't just want to

export the raw material, you want to give it some added value. I have

grandchildren, so I know that they need to survive in the next 100

years. You have been applauded for your efforts, Daphne. This year, you

were made the CEO of Africa by the Africa Forum for CEOs. It was a huge

competition with hundreds of entrants, and you won it. You have

that to celebrate. But it is also 20 years since the first multiracial

government came to power in April 1994. Is there anything for the

South Africans really to celebrate? I always knew I was a go-getter. I

worked hard. But I was never given an opportunity. I always had to work

for other people, white people. Young, some of them. What 1994

brought to me was an opportunity to fly on my own. So you feel there is

something for you to celebrate with your own enterprise, but is there

something for South Africans as a whole to celebrate? I think there

is. We have a bill of rights. We have a constitution. You can say

what you want to say about the president. We have a public

protector. We have an independent electoral commission. I think there

are challenges that still remain, and I think that really, it is a

work in progress. Daphne Mashile-Nkosi, thank you very much

indeed for coming on HARDTalk. Thank you very much.