Global South African News Wrap - 26 October 2012

ANC to host world solidarity conference Ramaphosa’s vast empire Chance for Gordhan to show investors that he is in charge Quality was the ANC’s watchword under Tambo Zuma’s land plan is a start at least Ramaphosa ‘will not comment on Marikana e-mails’ Ramaphosa e-mail is a gift to his detractors AngloGold starts to dismiss striking miners Investment in SA down 43.6%, says UN report Zuma outlines new plan for land reform South Africa is moving forward, despite opinions SA hosts presidential summit to strengthen ties with mineral-rich Congo Growing support for Ramaphosa as Zuma’s deputy ANC policy-making ‘does not work’ Rogue members ‘sabotaging’ ANC Eskom bids to reverse BHP Billiton ‘cheap power’ deal SA's R300bn bill to keep lights on Miners 'slain like vermin' Sisulu cracks the whip ANC pays tribute to Kumalo SA not so bad, says Presidency Why we’re facing more years of Zuma Zuma politically bankrupt –Mbalula Acquisitions in SA now unattractive Number of wealthy in SA up 31%, says Treasury Reinstate all dismissed strikers, says Cosatu Marikana inquiry to start after much delay Zuma rebukes media over criticism as Mbeki joins in Anglo boss urges tough line to halt mine unrest Cosatu out for Mbeki's blood

25 October 2012 The New Age Sapa ANC to host world solidarity conference Despite preparing for the much-anticipated Mangaung elective conference, the ANC said it will hold the 3rd International Solidarity Conference aimed at uniting people for peace and social transformation across the globe. ANC national chairperson Baleka Mbete said the four-day conference, to be held in Pretoria, would help create a human abuse-free world and sustainable environments. She said the gathering was also expected celebrate of the legacy of former ANC stalwart, the late Oliver Tambo and the centenary of the party. Mbete said: “Tambo served as a catalyst both nationally and internationally. His contribution to the path to the democratic era was unique and it ensured mobilisation of international solidarity against the self-imposed apartheid regime.” She was addressing reporters in Johannesburg. She said the international solidarity community participated immensely in the attainment of South Africa’s freedom. “This conference will enable some of those from the international community who participated in the fight against the regime to be part of honouring Tambo’s legacy. “The international community was one of the pillars of the struggle against apartheid through which the ANC mobilised civil society, political parties and other world sectors to advance the objectives of the national democratic revolution.” Mbete said the conference, to be held under the theme United for a Progressive, Better World, drew its mandate from the up 52nd ANC national elective conference. She said it would be funded by ANC comrades, who were presently not serving the party on a full-time basis. “We will look around for funding and we hope our comrades will help us,” Mbete said. Asked if the gathering might enable the ANC to instill renewed confidence

within its ranks, Mbete said: “Yes, the conference will help us within the ANC. It will enable us to move forward but it is not a trial run towards the upcoming elective conference.” According to Mbete, about 1000 delegates from all over the world and within South Africa are expected to grace the occasion. She said the conference will happen at a time when there is an economic crisis in Africa and when the continent is looking at the whole world in anticipation of a swift action to end the crisis. Mbete said some of the issues to be tackled at the gathering include the promoting a common understanding of shared and progressive values towards poverty and security stability for all mankind, the reflection of South Africa’s engagement with the rest of the world after apartheid and building a global progressive movement for a better Africa and a better world. She said the conference would not be held annually but its participants might explore ways of continuing their engagements to assess the progress made in implementing resolutions. Deputy Minister of International Relations and Cooperation Ebrahim Ebrahim will open the conference at the Tshwane City Hall. 25 October 2012 The New Age Sapa Ramaphosa’s vast empire Shanduka, a vast, multibillion-rand holding company controlled by Cyril Ramaphosa, was this week shown to be protecting its interests in Lonmin, the world’s third-largest platinum producer. Ramaphosa’s name was prominent at the judicial hearings into the so-called Marikana Massacre on August 16. Advocate Dali Mpofu referred to emails dated August 15, in which Ramaphosa, Shanduka’s executive chairperson, described the conduct of wildcat strikers at Lonmin as criminal acts. He called for “concomitant action”. Mpofu said there were emails “being exchanged between Lonmin management, government ministers (of mineral resources and the police) and at the centre is a gentleman called Cyril Ramaphosa”. Lonmin later stated that due to “the violence and loss of life in the period August 10 to 14”, it had “engaged with a number of stakeholders to ensure that the situation in and around Marikana was addressed in the appropriate manner”.

Shanduka, an investment holding company founded by Ramaphosa, James Motlatsi and several other black professionals, holds interests across the spectrum of the South African economy, from mining to McDonald’s and from financial risk services to Coca-Cola bottling. Shanduka holds 50% of Incwala Resources, which in turn holds 18% of Lonmin’s two main operations, Western Platinum and Eastern Platinum. Lonmin’s original black economic empowerment (BEE) deal fell over for financial reasons. The deal was refinanced on May 10, 2010, when Lonmin announced that its new BEE partner would be Shanduka. This would be a sweetheart deal. Shanduka was only required to put £27m (R380m) into the deal; Lonmin provided to Shanduka a loan of £206m (about R2.3bn at the time) bearing interest at just 5% a year. Lonmin raised the cash, effectively on Shanduka’s behalf, from Lonmin shareholders, most of which are based in London. The R2.3bn loan to Shanduka is secured by Lonmin shares; if the deal for any reason fails, Shanduka would simply return its Lonmin shares. Apart from the £27m commitment that Shanduka made, Shanduka’s potential is all to the upside – it cannot lose. Lonmin boldly said that “Shanduka will provide strategic support to Lonmin in achieving its BEE objectives”. Whether or not this stretched to labour relations was not stated. Ramaphosa, a trained lawyer, had been instrumental in the formation of South Africa’s modern labour movement. The 1987 mines strike was led by Ramaphosa who earlier in the 1980s had been instrumental in founding the National Union of Mineworkers (NUM) and then C OSATU osatu. The 1987 strike saw 340,000 miners from 40 gold and coal mines putting downing tools. In the immediate aftermath of the strikes, around 50000 mining jobs were lost. Beyond its stake in Lonmin, Shanduka’s resources portfolio also holds 30% of Kangra Coal, 13% of Lace Diamonds, 7.5% of MacSteel SA, 26% of Pan African Resources, 5% of Scaw Metals, and is busy acquiring 50.1% of Shanduka Coal. Shanduka is also involved in several energy projects in South Africa and Mozambique. Beyond resources, Shanduka’s most valuable holding is 1.2% of Standard Bank, worth just over R2bn. Shanduka also holds 0.45% of MTN, which is worth R1.3bn. Shanduka’s stakes in Liberty Life and Bidvest are together worth almost R1bn. The holding of the Ramaphosa Family Trust in Shanduka is not disclosed, but it appears first on a list of shareholders. 25 October 2012 Business Day Page 11

Tim Harris Chance for Gordhan to show investors that he is in charge IT IS difficult to think of a medium-term budget policy statement more important for South Africa than the one that will be presented by Finance Minister Pravin Gordhan on Thursday afternoon. South Africa is in the eye of an economic storm. The past few months have seen two credit-rating downgrades, several outbreaks of violent industrial conflict and yesterday’s news that foreign direct investment has plummeted by 43% in the past year even as inflows have risen across Africa and the rest of the developing world. Many South Africans have been left reeling from the barrage of bad news and some are asking whether our nation has what it takes to compete in the world economy. We have ended up here because the current national government, from the president down, has failed to speak with one voice on the economy and has been unable to steer us on a path of higher growth, despite our country’s abundant assets. We will get out of this mess, sooner or later, because South Africans have the capabilities, the resources and the spirit to fight our way out. But if we are to get out soon, it has to begin this afternoon with a big speech from Gordhan that shows he has his hand firmly on the fiscal tiller and is willing to provide the leadership to cut through the mixed messages of the African National Congress (ANC) government on the economy. He will have plenty of resources to marshal for the fight. We are sitting on the world’s most valuable stockpile of mineral reserves, estimated at $2,5-trillion. South Africa has produced world-beating champions — such as South African Breweries, Discovery, Bell Equipment and Black Like Me — that compete all over the world. Tax revenues have consistently exceeded the Treasury’s expectations, with taxpayers proving willing, so far, to shoulder the burden of social spending. Most important, we have the opportunity of African growth on our doorstep. The International Monetary Fund estimates that economic growth in subSaharan Africa will exceed 5.5% this year, even as our own growth remains stuck below 3%. The reason for this is that our economy continues to be dragged down by slow growth in Europe, rather than buoyed by Africa’s growth.

We have not managed to tap into African growth because many South African companies have been relatively slow to take advantage of trade and investment opportunities on the continent. We may have spent Thabo Mbeki’s presidency listening to him wax lyrical about the "African Renaissance" but while he was doing so, most of our diplomats on the continent sat on their hands. But just because the government has failed to turn the African rhetoric into practical trade outcomes on the continent it does not mean that individual companies aren’t breaking through. This past weekend, a Democratic Alliance (DA) delegation led by the leader of the opposition attended the 58th Congress of Liberal International in West Africa. On the way back, we stopped at Accra Mall in Ghana. Designed, managed and partly funded by South African firms, this 20,000m² mall is anchored by Shoprite and Game and packed with South African retailers. Similar malls have sprung up in Lagos and Nairobi. Unfortunately, at the congress we attended, the narrative about South Africa was not about how to take advantage of opportunities in Africa. Instead, we found ourselves fielding question after question about "Cry the beloved country, South Africa’s sad decline" — last week’s cover story in The Economist. The Presidency can protest against the piece all it likes, but the risk perceptions created by such a story, combined with the institutional cost effects of the Moody’s and Standard & Poor’s downgrades, define the current turmoil in South Africa’s economy. Now it falls to Gordhan to lead the way out. This afternoon, Gordhan needs to send a strong signal that debt will not be allowed to rise to unsustainable levels. It seems clear that the budget deficit will rise, but to protect overall government debt levels he will have to plot a path for fiscal consolidation over the medium term. A recent study of 58 countries shows that South Africa is set to record the 12th-highest budget deficit in the world this year. Almost all countries drove deficits up to deal with the global economic downturn, but other middleincome countries such as Malaysia and Poland are currently drawing them down, while we appear to be engineering something of a double-dip deficit expansion. The first place Gordhan should look to cut back is wasteful expenditure. Among the departmental annual reports for last year submitted to Parliament so far this year, the auditor-general has identified R3.8bn and R2.44bn in irregular and unauthorised expenditure respectively and R444m of fruitless and wasteful expenditure.

This noncompliant spending tops R6.7bn, even as the reports show the national departments in question achieved only 52% of their targets. The story is as bleak on trade and investment. The latest trade statistics from the South African Revenue Service tell the story of a loss of productivity in the economy and the subsequent effect on trade. Our exports decreased by R2.1bn in August, while our imports increased by R3.4bn. In that month we imported R12bn more than we exported. The net effect has been a waning trade balance and a worsening current account deficit driven by foreign investors switching out of local equities for the safety of short-dated bonds, while local investors have been pouring money into rand-hedging equities to mitigate against expected future inflation. It is now also clear that the bottom has fallen out of foreign direct investment into South Africa. The United Nations Global Investment Trends Monitor, published on Tuesday, shows that inflows into South Africa declined by 43% in the past year: the largest decline among all developing economies. In comparison to our performance, emerging economies such as Chile and Thailand have seen increases in foreign direct investment of 80% and 62% over the same period. Further, inflows to the rest of Africa grew by more than 5%, even as they were declining into South Africa. If Gordhan achieves one thing in his speech, it must be to reassure investors that he is firmly in charge of economic policy and that the government is able to implement a clear plan to ensure that South Africa is a place where they can do business. This means that he needs to dispel fears that the government will bow to pressure from its tripartite partners to implement unsustainable, populist policies and instead announce a programme of wholesale policy reform that should begin with a plan to integrate the proposals in the National Development Plan into the departmental budgets from February next year. As part of our visit to West Africa, we met Ivorian President Alassane Ouattara. A former International Monetary Fund economist, he spent 12 years in opposition before assuming office last year. He comes across as thoughtful leader with a deep knowledge of economic issues, a firm grasp on the opportunities in Africa and a clear plan to turn around his newly strife-free country. I left the meeting wishing we had more leaders like him in South Africa. On Thursday afternoon, Gordhan needs to show that he is one. 25 October 2012 Business Day Page 11 Z Pallo Jordan

Quality was the ANC’s watchword under Tambo AS ITS longest-serving president, Oliver Tambo’s name is inextricably linked to the African National Congress (ANC). He was called upon to lead during the movement’s most difficult years. He was among the founding members of the ANC Youth League, a galaxy of young men and women who transformed the ANC into the organiser and leader of a mass movement that shook the pillars of white domination in wave after wave of mass struggle during the 1950s. It devolved on Tambo’s generation to take all the strategic decisions that shaped the movement over the next four decades. They piloted the Programme of Action through the branches until it reached the ANC conference floor and was adopted as policy in 1949. They led the Defiance Campaign that made Nelson Mandela a national figure as volunteerin-chief in 1952. When the ANC was banned in 1960, they took the decision to go underground, and they took the decision to create Umkhonto weSizwe and launch the armed struggle. When the political climate was auspicious, it was again they who led in the decision to seek a negotiated settlement. The ANC was fortunate that it was to Tambo to whom the responsibility of leading the movement inside South Africa and in the rest of the world was entrusted after the death of Albert Luthuli. Tambo’s achievement is analogous to repairing a battered skorokoro while driving it to its destination through heavy traffic. Tambo went into exile the day that the statute banning the ANC had its first reading in Parliament. His assignment was establishing an external mission to mobilise support for the struggle of our people. Tambo’s mission was radically redefined by the Rivonia raid in July 1963. With the underground liberation movement virtually closed down inside South Africa, it was Tambo who reassembled its scattered remains, united them with the movement’s forces outside South Africa and moulded an instrument capable of galvanising our people into action. Tough, hard-nosed realism was one of his leadership skills. He understood that the oppressed people were not an uncomplicated, homogenous mass but represented a plurality of interests and aspirations that could be harnessed around the shared objective of emancipation. Giving leadership to such a diverse constituency required tactical flexibility and strategic vision that recognised the need to manage the contradictions. Tambo will continue to confound observers because he preferred nurturing a culture of collective leadership and cultivated an environment in which the president is first among equals within the ANC: the first among equals whose respect he had earned, enjoyed and maintained by virtue of the quality his leadership. A legacy to be nurtured. Under Tambo, the ANC did not shirk the challenge of earnest introspection, self-criticism and grasping the nettle of corrective action when necessary.

Terrible mistakes and ugly deeds were committed during the struggle. The ANC retraced its footsteps and evaluated its own weaknesses and mistakes as a precondition for enhancing its strengths. It was a readiness to do this at Morogoro in 1969, and again at Kabwe in 1985, that gave it the ability to reconstruct itself to become the organising centre of resistance. Its principal task was knitting together a broad front of opposition to apartheid inside South Africa while rebuilding an effective underground capable of sustaining a secret army in the shape of Umkhonto weSizwe. An equally broad front of people was built to isolate the apartheid regime in the world community and hasten its defeat. It inspired thousands of acts of solidarity and support, in actions that ranged from individual consumers boycotting Outspan oranges at a European market to mass demonstrations to stop Springbok rugby tours. It culminated in voters in the West compelling their governments to impose sanctions. Tambo was respected by his peers among the leaders of the continent. He won the respect of the movement’s allies and supporters internationally by his insistence on the quality of the movement he led and the quality of its actions and pronouncements. It is testament to the leadership collective he assembled that, at a historic moment, when the prospects of the movement were changing decisively for the better, we did not witness an obscene scramble for power. Instead, a smooth transition was executed from Tambo’s presidency to Nelson Mandela’s after he was disabled by a stroke. When he left South Africa in 1960, the ANC instructed Tambo to build an international solidarity movement. The size, scope and diversity of the solidarity movement at its peak during the 1980s attests to his success. The ANC is marking Tambo’s birthday on Sunday with an international conference bringing together the principal actors in that solidarity movement — a fitting tribute to an outstanding president. 25 October 2012 Business Day Page 10 Editorial Zuma’s land plan is a start at least HEAVY on rhetoric and short on detail. That about sums up much of what passes for government policy these days, so it is no surprise this was also the verdict of a respected land and agrarian expert in response to President Jacob Zuma’s proposal for a new approach to land reform.

Consultation and inclusiveness in policy-making are important — obligatory, actually, in terms of the constitution — but that is not meant to be an excuse for inaction. There is no shortage of grand plans in South Africa, yet few seem to be implemented with much vigour and efficiency. That said, Mr Zuma’s contribution to the seemingly endless land-reform debate is a welcome advance on the stale argument over whether the "willing buyer, willing seller" approach is workable, and if not, why. That discussion was going nowhere and it was in any event clear that acquiring the land was only one part of the problem. The shockingly high failure rate of land-reform projects carried out in the farming sector to date reveals that even if the government were to expropriate 40% of the arable land currently in white hands tomorrow and hand it over to black land-reform beneficiaries, South Africa would still not have a thriving class of black commercial farmers. What it would have is a lot of disgruntled farmers, black and white, and a major food-security crisis on its hands. Successful farmers, especially commercial operations, are not created merely by giving people land, or even by lending them money at subsidised interest rates, as the Department of Agriculture is apparently planning to force the Land Bank to do. Commercial farming is a high-risk business that demands education, experience and long-term commitment if it is to be run profitably, even on the fraction of the country’s arable land that receives sufficient rainfall or is irrigable. If we accept that increased black ownership and participation in the domestic farming sector is desirable, for reasons of justice and long-term social stability, some sort of system of acquiring and redistributing land in an equitable manner is inevitable. The willing buyer, willing seller system fulfilled those criteria but ran into problems, some caused by the effect such interventions in the market invariably have on prices and others by bureaucratic inertia and corruption. Whatever the reason, this approach has not achieved its goal and has little prospect of ever doing so. Mr Zuma’s five-point plan, which involves establishing district land-reform committees including commercial farmers and those seeking redress, to identify land that could be made available for reform, should therefore be given serious consideration. It is a welcome change from the officious, top-down approach of the past, which all but ignored the complex social dynamics of rural communities. Land reform will work in SA only if there is buy-in from the established white farming sector, beneficiaries, farm labour and the state. That means moving away from the finger-wagging of the past, which alienated white farmers and soured relationships that were essential to reform. It will also mean sacrifices on the part of established agriculture, which it will no doubt be prepared to make in the interests of nation-building and long-term security of tenure. The state, too, will have to up its game — far too many

opportunities for harmonious land transfers have been lost to red tape and official incompetence. It is unclear how Mr Zuma came up with the figure of 50% of market value as a reflection of the "fair productive value" the state would be prepared to pay for land, but it is at least a starting point for debate. If commercial operations can be guaranteed immunity from pressure to give up land in return for selling parts of their operations to black farmers, helping finance other land-reform projects or contributing in kind to the success of the process, they may be open to negotiation. 25 October 2012 Business Day Page 3 Ernest Mabuza Ramaphosa ‘will not comment on Marikana e-mails’ SHANDUKA executive chairman Cyril Ramaphosa said on Wednesday that he would not be making any public comment on the e-mail he wrote to Lonmin a day before police shot and killed 34 striking miners in Marikana, near Rustenburg, on August 16. The Marikana commission of inquiry heard on Tuesday how Mr Ramaphosa, in an e-mail on August 15, condemned the preceding protests that had resulted in the deaths of 10 people as "dastardly criminal acts", and had urged that action be taken to deal with the striking workers. Excerpts from the e-mails, which formed part of Lonmin’s submission to the commission, were published in the media on Wednesday. "We have e-mails that were being exchanged between Lonmin management and a government department. At the centre is a gentleman called Cyril Ramaphosa," advocate Dali Mpofu said in his opening statement. Mr Mpofu represents 272 miners who were charged with murder after the August 16 shooting. "This was on August 15 at 2.58pm, exactly 24 hours before the people were mowed down on that mountain," Mr Mpofu said. He said Mr Ramaphosa had called for action to deal with the "criminals, whose crime was to seek a wage increase". Mr Mpofu referred to the shootings as a "toxic collusion" between the police and Lonmin. Shanduka spokeswoman Maureen Mphatsoe said the statements formed part of the inquiry and Mr Ramaphosa would not be making any public comment on the matter.

Shanduka owns 9% of Lonplats, a Lonmin subsidiary. Mr Ramaphosa is a nonexecutive director on the board of Lonmin. Lonmin said on Tuesday it had engaged with stakeholders to ensure that the violence that resulted in the loss of lives between August 10 and August 14 at Marikana was addressed appropriately. "Lonmin is a mining company and is not responsible for law enforcement. It therefore stands to reason that the company, including members of its board, would communicate with the relevant stakeholders in government to ensure that they properly understood the company’s view of the situation on the ground to ensure a peaceful resolution of the matter," Lonmin said. In his opening statement to the commission, Lonmin’s advocate, Schalk Burger, said the mine would deal with the events in the days leading up to the massacre, including the interaction between striking workers, the police, Lonmin security and trade unions. Mr Burger said Lonmin would not be able to assist the commission on what happened on August 16 because the area where the shootings occurred was under the control of the police.

25 October 2012 Business Day Page 3 Sam Mkokeli Ramaphosa e-mail is a gift to his detractors THERE has been outrage following the revelation of an e-mail that businessman Cyril Ramaphosa wrote ahead of the Marikana massacre, allegedly condemning protests by workers at the mine. The news of the e-mail serves as ammunition to those who want to block Mr Ramaphosa’s chances of becoming African National Congress (ANC) deputy president in Mangaung in less that two months. Advocate Dali Mpofu reportedly told the Farlam commission of inquiry into the Marikana massacre this week that Mr Ramaphosa had condemned protests by workers at the mine. He allegedly called for "concomitant action". The ANC Youth League on Wednesday jumped at the opportunity to criticise Mr Ramaphosa. League spokesman Khusela Sangoni-Khawe said: "Comrade Cyril Ramaphosa has lost any credibility as a genuine leader of the people

and a revolutionary committed to the cause of the working class. With his email to Police Minister Comrade Nathi Mthethwa, Comrade Ramaphosa delivered the more than 40 people to their death at Marikana." But do the people who matter, the 4,500 delegates to the Mangaung conference, really care about the image of the people they elect? If credibility was part of the criteria, President Jacob Zuma would not have been elected head of the ANC with all the financial and sex scandals. That, however, does not stop the youth league from making use of the Marikana events to discredit their opponents. The simple fact that Mr Ramaphosa sits on the board of Lonmin — and now the revelation of his e-mails — tainted his image in the eyes of those who want leadership change in Mangaung. Until the August 16 shooting, Mr Ramaphosa was considered to be a dignified politician who could give credibility to any of the Mangaung camps. Those who have been courting him for the ANC deputy president post under Mr Zuma are after his reputation. That is a reputation he built as a trade unionist, ANC secretary-general in the early 1990s and as a businessman. Personalities including Trevor Manuel, Naledi Pandor, and Mr Ramaphosa have been associated with the Zuma camp. They are being touted by campaigners who realise that Mr Zuma would be exposed if his deputy, Kgalema Motlanthe, a philosophical and a largely untainted leader, took him on. That is where Mr Ramaphosa’s credibility comes in. Serving on the National Planning Commission also portrays him as a well measured and grounded leader. But the Lonmin saga has now portrayed him as an aloof businessman. And the image of an uncaring mogul does concern Mr Ramaphosa, it seems. His public apology last month for bidding for an R18m buffalo suggests that he is sensitive to how he is perceived. False reports in 2005 that he owned a Maybach car drew a stinging rebuttal from an "embarrassed" Mr Ramaphosa. There may well be a perfectly plausible explanation for his e-mail and his conversation with Mr Mthethwa before August 16 shooting. But the way politicians are judged is often not a rational process, as the immediate condemnation of Mr Ramaphosa’s e-mail suggests. The ANC Youth League is doing its best to pull down a man vaguely associated with their political enemy Mr Zuma. It has experience in this tactic of "hitting the dog until the owner comes out", as they did before the Polokwane conference five years ago — attacking people associated with then president Thabo Mbeki.

There is no evidence, however, that Mr Ramaphosa has any appetite for becoming Mr Zuma’s deputy. He is not their first choice for the job. He is more like a backup for the Zuma camp in case Mr Motlanthe accepts nomination to take on Mr Zuma. But his image, which is taking a beating because of Marikana events, may just add a drag to the Zuma camp should the campaign to install Mr Motlanthe take off. 25 October 2012 Business Day Page 1 Allan Seccombe AngloGold starts to dismiss striking miners ANGLOGOLD Ashanti began dismissing 12,000 strikers who ignored an ultimatum to return to work on Wednesday after it had idled some of the world’s deepest mines for nearly five weeks. Gold Fields, Anglo American Platinum, Gold One and Atlatsa Resources have also dismissed thousands of workers for participating in illegal strikes. AngloGold has warned that marginal areas of its mines could be shut as a result of the strike, as rock pressure is immense at its up-to-4km deep mines, and working areas deteriorate quickly. The world’s third-biggest gold miner said work resumed at four operations after more than 90% of the strikers returned to work this week. The company’s Savuka, Tau Tona and Mponeng mines, near Carletonville, remained idled. AngloGold said its September quarter production would be 1.03-million ounces compared to a forecast of between 1.07-million and 1.1-million ounces because of the strike and lower production from its Obuasi mine in Ghana. But analysts said the full effect of the strike would be felt in the December quarter. AngloGold is losing 32,000oz of gold a week, worth R478m at current prices. Gold Fields dismissed 1,500 workers from its Kloof Driefontein Complex (KDC) West mines last week, and it dismissed 8,100 more at KDC East on Tuesday. More than 7,000 of the KDC East workers have appealed against their dismissals. Their appeals will be heard over the next few days. AngloGold will follow a similar process of giving workers opportunity to appeal.

Harmony’s ultimatum to 5,400 workers who participated in an unprotected strike at its Kusasalethu mine, near Carletonville, expires on Thursday. "The firing of workers is a desperate measure on the part of companies. Given the interactions we’ve been having with companies, we believe these actions are premature," Lesiba Seshoka, National Union of Mineworkers (NUM) spokesman, said on Wednesday. AngloGold, Harmony and Gold Fields are expected to meet at the Chamber of Mines with the NUM, Solidarity and the United Association of South Africa on Thursday to sign an agreement designed to end the strikes in the gold sector. Participants have said the contents of the agreement are largely the same as proposals put forward by the gold companies to address the salaries of the lowest paid workers and underground operators of drills, locomotives, winches, loaders and water jets. The proposals would add less than 3% to the companies’ annual wage bill, but together with the 10% wage increase workers received in July as part of a two-year salary agreement, this was a good offer, said Mr Seshoka. "It’s an important day. Many workers are indicating they are willing to go back to work," he said. "We’ve got Christmas just around the corner and kids need new school uniforms. Workers are under pressure to return." Talks among platinum producers and organised labour under the auspices of the chamber are continuing as they set up a centralised bargaining process. However, one of the key participants, the Association of Mineworkers and Construction Union (Amcu) which has made enormous membership gains on platinum mines at the expense of the NUM, has withdrawn. Facilitators are in constant communication with Amcu to get it to return, chamber executive Vusi Mabena said.

25 October 2012 Business Day Page 1 Mark Allix Investment in SA down 43.6%, says UN report FOREIGN direct investment flows into South Africa plummeted by 43.6% in the past year — the largest decline among all developing economies — according to the United Nations Conference on Trade and Development’s (Unctad’s) latest Global Investment Trends Monitor.

Following three government departments’ opposition last year to Walmart’s R16.5bn investment in South Africa, the country is perceived as hostile to foreign investors. South Africa’s poor performance, attributed by the authors of the report to slower global economic growth, was in sharp contrast to the rest of Africa, which saw a 5% growth in foreign investment. South Africa attracted $3bn in the first half of last year, but this plunged to $1.7bn in the first half of this year, the Unctad report said. "Developing countries for the first time absorbed half of global foreign direct investment inflows due to the steep fall in flows to the US and a moderate decline in flows to the European Union." China was the world’s largest recipient of foreign investments in the first half of this year. Democratic Alliance finance spokesman Tim Harris on Wednesday attributed the decline to a loss of investor confidence. He said that since the start of the 2008 global financial crisis, the government had "failed to spur growth". Mr Harris called on Finance Minister Pravin Gordhan to use Thursday’s medium-term budget policy statement to table an "emergency plan" to restore investor confidence in South Africa. "Figures such as those in the Global Investment Trends Monitor will become commonplace if every government leader does not start demonstrating a strong commitment to sound economic policy aimed at stimulating growth and creating jobs," he said. But Nomura International economist Peter Attard Montalto said Mr Gordhan was "powerless" to correct the slump. "The Treasury has tried to push for a better, more streamlined process for foreign direct investment, but this has become highly politicised and there is a turf war … between the Treasury, the Department of Economic Development and the Department of Trade and Industry," he said. The Treasury on Wednesday referred queries on the report to the Department of Trade and Industry, which did not respond. Mr Harris agreed that, in recent months, South Africa’s economic woes had intensified as the government "failed to overcome its internal ideological confusion on the economy", leaving the country vulnerable to labour unrest and rating downgrades. Mr Montalto said the Reserve Bank had reported "basically zero" foreign investment in South Africa a few months ago. "However, the Unctad report

highlights the extremely poor performance of South Africa against even very weak peers … such as Greece," he said. He said foreign transactions in South Africa had been sporadic in the past few years, and did not compare with Turkey and Brazil, "where there are a large number of transactions of all sizes going on". Mr Montalto said this stemmed from "policy uncertainty", particularly in the mining sector, along with increased "hurdles to entry" for new foreign investment set by the Department of Economic Development. Last year, the departments of economic development, trade and industry and agriculture, forestry and fisheries opposed US retail giant Walmart’s R16.5bn merger with Massmart, wanting competition authorities to impose "more effective conditions". Mr Montalto said multinational companies preferred to use retained earnings to invest elsewhere in Africa or globally, rather than in South Africa. 22 October 2012 IOL Sapa Zuma outlines new plan for land reform President Jacob Zuma proposed a new land reform plan in Pretoria on Monday evening. “This is an innovative proposal that needs to be tested,” he told the first annual general meeting of the African Farmers' Association of South Africa (Afasa). The plan proposed a district-based approach to land reform and its financing. “It proposes that each district should establish a district land reform committee where all stakeholders are involved,” Zuma said. “This committee will be responsible for identifying 20 percent of the commercial agricultural land in the district and giving commercial farmers the option of assisting its transfer to black farmers.” Implementation of this land reform proposal would include five steps. Firstly, it would entail identifying land readily available from land already in the market; land where the farmer was under severe financial pressure; land held by an absentee landlord willing to exit; and land in a deceased estate. “In this way, land can be found without distorting markets.”

Secondly, the state would buy the land at 50 percent of its market value. This, Zuma said, would be closer to its fair productive value. The current owner's shortfall would be made up by cash or in-kind contributions from the commercial farmers in the district who volunteered to participate. Thirdly, in exchange, commercial farmers would be protected from losing their land and gain black economic empowerment status. “This should remove the uncertainty and mistrust that surrounds land reform and the related loss of investor confidence. Fourthly, a stepped-up programme of financing should also be created, Zuma said. This would involve the Treasury, the Land Bank, and established white farmers. “The model envisages that the cost of land reform be spread between all stakeholders. “It also envisages new financial instruments being designed for the purpose of facilitating land reform.” These could include 40-year mortgages at preferential rates for new entrants into the markets, as well as land bonds that white farmers and others could invest in. The fifth step was increasing investment in agricultural research and development. “We also need to use the investment more strategically.” Zuma said the government looked forward to ongoing engagement with Afasa. “So that we can develop and harness our vision for agriculture and food security together.” - Sapa

23 October 2012 Business Report Page 2 Jacob Zuma South Africa is moving forward, despite opinions The assertions in the article published by the UK magazine the Economist on October 20 (Sad South Africa – Cry the Beloved Country) cannot go unchallenged as they are so misleading. It is grossly incorrect to suggest that South Africa is on a downhill slide.

The country may have received a downgrade from two ratings agencies, but so have many other countries, even in Europe and elsewhere. It is the sign of the times. The world is going through a period of serious economic upheaval. South Africa was privileged to have an icon like president Nelson Mandela as its first democratically elected president. However, this does not make the country immune from economic, social or political challenges at certain periods, more so given the legacy arising from colonial oppression and apartheid. Despite the challenges, South Africa is getting many things right. On the economic front, the economy possesses the necessary dynamism to position the country as a competitive player in a difficult global economic environment. In direct contrast to the Economist article, a strong vote of confidence on South Africa was given in the last week by the international business community with the country’s recent inclusion in Citigroup’s World Government Bond index (WGBI). South Africa has attracted strong flows of foreign investment into its bonds as investors have switched to emerging markets. South Africa will be the first African country and the fourth emerging market to be included in the index. The promotion is also significant because it can potentially bring down the cost of borrowing for the country. An estimated $2 trillion (R17.3 trillion) worth of funds track the WGBI. South Africa has met with all the required criteria for entry for the third month running and, as a result, has been allowed into the prestigious WGBI champions league of countries. Our success is also visible when benchmarking the country against other emerging market economies such as the Brics nations (Brazil, Russia, India, China and South Africa) and Next 11 countries In the recently issued World Economic Forum Report on Global Competitiveness that benchmarks the performance of 144 nations, including South Africa, the country performed particularly well against the report’s financial pillars. With regards to financial market development, South Africa ranks first among the Brics nations, and third overall in the world. Other key areas where South Africa performed well in comparison to its fellow Brics nation members were with the legal rights index, the regulation of securities exchanges, the efficacy of corporate boards, and the strength of auditing and reporting standards, where South Africa was placed first against each pillar. Again, these are critical areas that can encourage inward investment. This past week, we welcomed the good news that tourist arrivals had increased by an impressive 10.5 percent during the first six months of 2012, which is double the global tourism growth rate of 5 percent. This means our country continues to be a popular destination.

At a social transformation level, government policies have extended basic services like water, electricity, sanitation, housing or social security to millions of people for the first time in their lives, in the past 18 years of freedom. Dramatic achievements have been scored in the fight against HIV and Aids. We have moved from very difficult times indeed on HIV and Aids to a success story in a short space of time due to progressive leadership by government, assisted by civil society on the matter. The rate of new infections has decreased from 1.4 percent to 0.8 percent in the 15 to 24 age group. We now have 1.7 million South Africans on antiretroviral treatment, which has improved life expectancy. We have about 2 948 public health facilities now initiating patients on antiretroviral treatment compared to 495 in January 2010. One of our greatest success stories is the remarkable 50 percent reduction in mother-to-child transmission of HIV from about 8 percent in 2008 to 3.5 percent in 2011. Remarkably, 20 million people have to date been tested for HIV through the HIV counselling and testing campaign, launched publicly in 2010. This indicates that the stigma around the disease is being eradicated, which will assist prevention efforts. The rate of new HIV infections looks set to decline over the coming years. Life expectancy is dramatically improving in South Africa due to these important policy interventions and sound leadership. At the economic level, our New Growth Path framework focuses us on a growth and employment-creating path. Our intention is to boost job creation in six pillars – tourism, infrastructure, mining, manufacturing, agriculture and the green economy. Out of the six, we have this year singled out infrastructure development for an intensive focus. Building on the 2010 Fifa World Cup infrastructure build success, we have unveiled a 20-year infrastructure development programme that will cost about R4 trillion over the next 15 years. We will spend about R844 billion over the next three years. We are truly a country at work for a better life. Just two weeks ago, we were proud to launch the Eastern Cape schools refurbishment programme, where we are replacing 49 mud schools with modern schools. There are currently more than 2 000 school refurbishment projects across the country. In addition, 886 health facilities are being revitalised. We are also building two new universities in Mpumalanga and the Northern Cape, infrastructure that will expand access to higher education. We are building and improving rail, roads, ports, energy, broadband and roads around the country. South Africa’s manufacturing, automotive, information, communication and technology, petrochemical, and service sectors remain sophisticated and globally competitive and ready to attract local and foreign investors. We are also planning ahead, towards the next 30 years. Our long-term planning blueprint, the National Development Plan, outlines our vision of

dealing with inequalities, social injustice, and the developmental challenges facing our society, leading towards a prosperous society. At a political level, we have consolidated democracy and have strong institutions formed in line with the country’s progressive constitution. We have noted the tendency of late to exaggerate the debates and contestation within the ruling party, the ANC, as being as symptom of instability. ANC conferences are no more controversial than political dynamics in many other countries. The robust debates, though uncomfortable at times, result in policies that are agreed to by the majority, which ensures stability and cohesion. The democratic exercise should be seen as a strength rather than a weakness for the country. The violent wildcat strikes that we have experienced are a worrying factor as they should be in any economy, and the situation is being attended to collectively. The strikes should not be exaggerated, as intimated by The Economist, to conclude that South Africans’ economic fortunes will decline majorly against its African counterparts. Any such reckless conclusion would not have taken into account the strides that have been made in anchoring economic growth that have weathered the storms that even the developed countries of the north could not survive. While the banking system of the north has to be subsidised by the governments, South Africa’s banking sector demonstrates absolute resilience and manages to shield the economy from the economic meltdown that continues to affect many developed economies. Another of South Africa’s strengths is the ability of its people to come together when there is a problem and search for a solution. In response to the economic meltdown and the wildcat strikes, we convened the high level dialogue on the economy, bringing together government, business, labour and the community sectors. A similar initiative during the 2009 recession worked tremendously to cushion the economy and protect jobs. The outcome of the dialogue was an economic package designed to stabilise the labour environment, improve living conditions of mining communities and to further promote job creation. More importantly, South Africa is privileged to be part of Africa, which is rapidly becoming the continent with the fastest- expanding economic regions in the world. This steady upward growth path is expected to gain momentum and resemble the long-run growth curves that were experienced in east Asia over the past 20 years. South Africa is moving forward towards prosperity, under the very able leadership of President Jacob Zuma and his cabinet, working in equal partnership with the other arms of the state – the legislature and the judiciary.

They are supported by various partners in society; labour, business, faithbased organisations and many others that want to see South Africa succeed. We will face hiccups here and there, and now and then because of existing inequalities and poverty and the economic climate globally, but we remain firmly focused on building a united, non-racial, non-sexist democratic and prosperous South Africa. 23 October 2012 Business Day Page 4 Nick Kotch SA hosts presidential summit to strengthen ties with mineral-rich Congo SOUTH Africa is hosting a presidential summit in Pretoria and multisectoral talks involving 20 government ministers from South Africa and the Democratic Republic of Congo to expand political ties between the two countries. Presidents Jacob Zuma and Joseph Kabila will hold talks on Tuesday and sign what is likely to be a wide-ranging communiqué. A binational commission laid the foundations on Monday with the Department of International Relations and Co-operation. The large delegations, led by 11 ministers on the Congolese side, broke into groups to review existing agreements and discuss planned ones. The mineral-rich Congo is a giant on the continent, despite its ramshackle infrastructure, the poverty afflicting its estimated 65-million people and the conflict with Rwandan-backed rebels in eastern Congo — not to mention its reputation for corruption. South Africa and the Congo are involved in developing the Grand Inga hydroelectric project to harness the power of the Congo River and eventually generate 40,000MW of electricity — nearly as much as South Africa’s installed capacity. "We must pat ourselves on our shoulders for work done in the immigration, water and transport projects," International Relations and Co-operation Minister Maite Nkoana-Mashabane said. Projects that were not going smoothly were hampered by lack of funding and poor planning, she said, without elaborating. Ms Nkoana-Mashabane said the November 2011 elections that returned Mr Kabila to power for another five years had "further entrenched democracy".

The Catholic Church, the opposition and much of civil society decried the polls as rigged or badly flawed. The US, the European Union and the Carter Centre gave the same verdict. Congo’s foreign minister, Raymond Tshibanda, hailed South Africa’s support. "Without South Africa’s involvement perhaps the elections could not have been held and would not have achieved credibility." Mr Tshibanda said his government was looking for South Africa’s help to tackle security in eastern Congo. 23 October 2012 Business Day Page 3 Stephen Grootes Growing support for Ramaphosa as Zuma’s deputy SINCE the African National Congress’s (ANC’s) nominations process began, party branches have been increasingly suggesting former National Union of Mineworkers general secretary Cyril Ramaphosa for the post of party deputy president. Some of these proposals may have an element of short-term politicking — just the suggestion that Mr Ramaphosa could be ANC deputy president would put pressure on deputy president Kgalema Motlanthe to pin his colours to the mast on whether he will stand for president or stay where he is. If Mr Motlanthe decides to stay safely under the wing of President Jacob Zuma, then the post of deputy president will be closed to Mr Ramaphosa. However, if Mr Motlanthe makes a bid for the presidency, it would clear the way for Mr Ramaphosa to re-enter front-line politics in a major position. That then raises the question of what role he would play as ANC deputy president and, possibly, deputy president of the republic. It also leads to questions about the position he could find himself in 2017. Mr Ramaphosa is famously difficult to read. He has become almost as big an enigma in our politics as Mr Motlanthe himself. The chairman of the nongovernmental organisation Freedom Under Law, retired judge Johann Kriegler, once put it crisply, asking: "Have you ever tried getting hold of Cyril? Anyone who knows him will tell you it’s next to impossible." However, it would be odd for Mr Ramaphosa to be nominated without any kind of hint from him that he might be available.

It also appears that the nominations may have the slightest of nods from the Zuma camp. The real relationship between a president and his deputy, often his greatest threat, can often be revealed through the roles and duties given to the deputy. In the case of Thabo Mbeki and Mr Zuma, it was clear that Mr Mbeki used his power to assign duties that would show Mr Zuma in a bad light. Mr Zuma’s position as chairman of the Moral Regeneration Movement put him in an uncomfortable position after claims were made about his private life. In the case of Mr Zuma, he has put Mr Motlanthe in charge of the task team dealing with the proposed e-tolls in Gauteng. That is a job from which no one is likely to escape unscathed, due to the levels of public unhappiness, and government debt that are riding on the process. Thus it would appear that the first indication of the real relationship between Mr Zuma and Mr Ramaphosa, should they turn out to be leading the ANC after Mangaung, could be shown by Mr Zuma’s actions. Until this point, Mr Zuma appears to have acted in a way most likely to protect his own political interests, and has refrained from making decisions he feels may alienate parts of the party. Mr Ramaphosa, who may be used to a more decisive style of governing from his days in the trade unions, may find that frustrating. However, it would seem unlikely that Mr Zuma would give him any power over things that matter, if he felt Mr Ramaphosa could use that to strengthen his own power base. However, Mr Zuma may watch history very closely. Since the ANC was unbanned, it has become common practice for the party to elect the deputy leader as leader. This would put Mr Ramaphosa in prime position to take over the party after Mr Zuma’s second term ends in 2017. Mr Ramaphosa would surely be aware of this, and thus if he does make himself available for the position of deputy president, it is possible that this is his ultimate plan. Although, following ANC tradition, he would be likely to deny that. As president, Mr Ramaphosa might appear to have a very different style to Mr Zuma. He has been involved in business, and would appear to have a better grasp of what could lead to job creation. He would also appear to better understand the economy more generally. However, he would face the same problems that Mr Zuma faces now, in that taking decisive action in the ANC tends to alienate various groups within it, which would force almost any leader to move very carefully. While this may have ramifications for economic policy after 2017, it may not mean that issues such as the Limpopo textbooks scandal would necessarily be dealt with very differently. However, the real question, which is still to be publicly answered, is whether Mr Motlanthe and Mr Ramaphosa will run.

23 October 2012 Business Day Page 3 Carol Paton ANC policy-making ‘does not work’ THE African National Congress’s (ANC’s) policy-making process under which branches are called upon to make decisions on the nitty-gritty of complex issues "doesn’t work" and is damaging both the party and the country, National Planning Minister Trevor Manuel said on Friday. His comments come as the ANC prepares for its national conference at which, among other things, the sensitive topic of nationalisation is to be discussed. It is a debate that rating agencies and foreign investors will be watching carefully. In an earlier speech at an Ahmed Kathrada Foundation event last week, Mr Manuel said many of the challenges over the past 20 years had arisen because the ANC had not found a workable way to mandate those in government and hold them accountable. The party passes detailed resolutions every five years on all areas of government work, which the government then needs to implement. "Is the entire structure just not too democratic, requiring the matching of information between one system and the other, without matching the requisite skills?" Mr Manuel asked. "Involving ANC branch members in detailed decision-making assumed that they had the information and knowledge they needed for participation." Mr Manuel said in an interview after the speech there was a presumption that branches were equipped for policy discussions. "We need to simplify the process by agreeing on the broad framework (at ANC level) without being compelled to get into the nitty-gritty," he said. "The system as it is doesn’t work because it structures a relationship between people in the government and people in the ANC, but there is an asymmetry of information between them which is quite profound. For example, we will have people in government making proposals on nuclear energy and ordinary branch members (having) no idea what they are talking about." Another example was discussions on nationalisation. At the ANC’s policy conference in June, delegates queued up to voice their support for nationalisation, not wanting to be seen to speak out against the idea. "That is policy-making by vuvuzela," Mr Manuel said.

"Sloganeering around policy" was not in the interests of either the living standards of working people or industry, which would see underinvestment or excessive profit-taking by owners if they feared that nationalisation was a real possibility. Mr Manuel said rather than trying to map out the detail in ANC resolutions at conferences, it would be preferable for it to have principal planks on areas of policy. This would then be used to measure how far the government had progressed. One such principal plank could be on employment creation, on which the government would have to report both to Parliament and to the ANC on the action it takes. "The measure of success ought to be felt in people’s lives, not in how radical you are being in policy discussions," Mr Manuel said.

23 October 2012 Business Day Page 1 Sam Mkokeli Rogue members ‘sabotaging’ ANC ROGUE members of the African National Congress (ANC) and those who use the party for business opportunities are sabotaging its attempts to attract skilled leaders, national executive committee member Joel Netshitenzhe says. As the ANC prepares for its electoral conference in December, there is intense focus on its senior leadership. Former president Thabo Mbeki warned at the weekend that South Africa was heading towards an "endemic general crisis" under its current leadership. Mr Netshitenzhe said on Monday that attention should also be paid to the ANC’s membership profile. At a weekend lecture in honour of ANC stalwart OR Tambo, he warned that weak senior leaders and their poor-quality following would erode the party’s credibility. Suitably qualified potential leaders were being discouraged from joining the ANC by ambitious members and regional leaders who had their eyes on government positions and other benefits of power, he said. Attracting "community leaders in their own right" should be uppermost in the ANC’s recruitment drive, he said. Mr Netshitenzhe said the ANC should consider if it was "sufficient that leaders of the movement should narrowly be professional politicians, with no other link with communities than being leaders of the ANC and with no other skills than political activism". Attracting "community leaders" would help the ANC stay in

touch with the people it led, as it needed to appreciate its duty to lead not only its members but broader society. He said other political groups’ adoption of ANC values was not necessarily a problem. The party needed to distinguish itself from the rest not "merely by hanging onto the coattails of Oliver Tambo and invoking the history of struggle"; it needed to demonstrate its capacity to lead the implementation of its historic vision. ANC spokesman Jackson Mthembu said on Monday that Mr Netshitenzhe’s "constructive criticism" was in line with continuing debates in the party about attracting high-calibre leaders with experience in serving in other community organisations. 23 October 2012 Business Day Page 1 Siseko Njobeni Eskom bids to reverse BHP Billiton ‘cheap power’ deal ESKOM is referring its controversial, cheap-power supply contract with mining group BHP Billiton to the National Energy Regulator of South Africa (Nersa) for review, as the manufacturing sector clamours for its own "sweetheart" deal. The state-owned power utility announced on Monday that it was seeking a 16% increase in electricity prices each year for the next five years, which will raise the cost of doing business in South Africa. The new tariffs come into effect in April. Eskom’s revenue requirements for the five-year period are more than R1-trillion. Its capital expenditure will be more than R337bn. Eskom has been trying to get out of the contracts stipulating that it sells power to BHP Billiton at below cost. The commodity-linked electricity pricing and supply agreements were signed when South Africa had excess capacity. The deal has become a burden as it causes volatility in Eskom’s balance sheet. Finance director Paul O’Flaherty said last month that the loss to Eskom of its pricing arrangement with BHP Billiton was R5.5bn. Democratic Alliance MP Pieter van Dalen claimed last month BHP Billiton was paying 8.8c/kWh-10c/kWh due to the low aluminium price. In its new application, Eskom has asked Nersa to increase electricity prices from 61c/kWh to 128c/kWh in 2018.

Speaking at the announcement of its application for increases on Monday, Eskom CE Brian Dames said the BHP Billiton contract was being referred to Nersa this week for a review of its prudence. "All of our customers pay regulated fees — except one, BHP Billiton," Mr Dames said. He said Eskom would continue to negotiate with BHP Billiton, which recently appointed a new management team for its aluminium operations. Mohamed Adam, Eskom divisional executive for regulation and legal, said Nersa had the authority to review the contract. Nersa said on Monday if Eskom referred the matter to it, "due regulatory process will be followed, which includes requesting comments and inputs from affected parties". Lulu Letlape, BHP Billiton vice-president for communications and external affairs, said the company was aware of Eskom’s intention to refer the matter to Nersa. In 2010, Eskom and BHP Billiton reached an agreement on an amended power-supply contract for the Mozal smelter in Mozambique. But the utility has been unable to break the contract for BHP Billiton’s aluminium smelters in Richards Bay. Coenraad Bezuidenhout, executive director of the Manufacturing Circle, said on Monday that manufacturers also wanted electricity tariff subsidies. He said electricity price increases had in the past amounted to around 176% for manufacturers. "The additional costs will put us under pressure. There are already factories that are closing down due to cost pressures. If we’re not going to do something regarding electricity tariff hikes, it will be more difficult for them to survive," Mr Bezuidenhout said. "If the price increases are going to continue at above-inflationary levels, then we will have to give consideration to some sort of discount or cost-easing measures. "We are currently in conversation with the Department of Trade and Industry and the Treasury on an ongoing basis for electricity subsidies. Brazil is doing it." Nersa on Monday invited public comments on Eskom’s application, setting a November 20 deadline. The regulator will hold public hearings in all provinces between January 15-31 and will announce its decision on February 28. 23 October 2012 The Times Page 10

TJ Strydom SA's R300bn bill to keep lights on Eskom cannot afford another strike or downgrade by a ratings agency. This was the message from CEO Brian Dames and chief financial officer Paul O'Flaherty when they announced the parastatal's plans to hike tariffs by 16% a year over the next five years. Eskom needs to finance an expansion programme of R337-billion that aims to "keep the lights on", according to Dames. O'Flaherty said Eskom had to pay interest of R140-billion over the five years. But with its credit rating downgraded by Moody's and Standard & Poor's in recent weeks, issuing debt will probably be more expensive. Strikes also cost the company three weeks in the rolling out of its Medupi power plant, in Limpopo, which is set to start supplying electricity to a stressed network next year. Eskom yesterday announced plans that some think will hurt the economy. It aims to squeeze more revenue out of big business and it has asked energy regulator Nersa to review a calamitous long-term contract with BHP Billiton. For industrial users, tariffs are set to increase by 21%, though residential users should face only a 5% to 14% increase. For the lowest category of residential users, electricity might even become 1% cheaper. Nersa will consider the application and embark on a process of public consultation. If implemented, the increases will take effect in April next year. Asked whether the steeper increases for factories and mines would harm the economy, Dames said it is a debate the public needs to have. He also said cross-subsidisation was nothing new. But the Energy Intensive User Group, which represents most of the largest electricity consumers in South Africa, slammed the plan. "What Eskom is doing is putting the productive sectors of the economy out of business," said Energy Intensive User Group spokesman Shaun Nel. Nel thinks many industrial consumers will scale down their operations because of the toxic cocktail of more expensive electricity, higher labour costs and other factors such as increased water regulation.

His group was not against subsidisation, but Nel said he doubted the current model was the best way. "At the end of this five-year cycle Eskom will generate a return of nearly 8%," Nel said. Low tariffs for large industrial users will again be in the spotlight as the longterm supply contracts for BHP Billiton's aluminium smelters are reviewed. It has long been accused of having cost Eskom billions of rands since the 1990s. Media24 took Eskom and Billiton to court to reveal the contents of the contracts and won the first round. The judgment is being appealed and, accordingly, Eskom would not reveal any details yesterday. But the following weeks could shed more light on the contracts as Nersa will find it hard to review the sustainability of the contracts without the numbers. Business Unity South Africa said it would "critically interrogate" the structure and allocation of the tariff increase across the industrial, municipal, and household categories.

23 October 2012 The Times Page 6 Thando Mgaga Comrades pile into Mbalula Minister of Sport and Recreation Fikile Mbalula is in the firing line for reportedly letting loose a litany of insults directed at President Jacob Zuma. ANC branches in Eastern Cape and KwaZulu-Natal have demanded that he retract his statements or resign from the senior positions he holds in the party. Mbalula, who is also a member of the ANC's powerful national executive committee, was reported as saying that Zuma thrived on corruption and was a "politically bankrupt" leader who married "every week". Yesterday, Mbalula denied that he had insulted Zuma. He said his conversation with the Independent Newspapers journalists had been "twisted" for the sake of sensationalism. "At no stage of our conversation did I refer to President Zuma as marrying every week ... and being politically bankrupt.

"This is absolute nonsense and must be dismissed as such. It is not in my nature to play the man and not the ball because anything of this sort would amount to cheap politics and character assassination," Mbalula said. He said those jumping on the bandwagon to "lynch" and "vandalise" his name were being totally "disingenuous". There has been a great deal of tension leading up to the ANC's elective conference in December in Mangaung, with the party split into two main factions - those who support Zuma's bid for a second term and those in favour of Deputy President Kgalema Motlanthe taking over the party reins. Mbalula is believed to be a staunch opponent of Zuma's retaining power. Yesterday the ANC in Zuma's home province and political stronghold, KwaZulu-Natal, said Mbalula must retract his comments or resign. "We call on the ANC national working committee to call Mbalula to account on these comments as they are undermining the integrity of the organisation," said provincial secretary Sihle Zikalala. The Eastern Cape branch of the ANC also had harsh words for Mbalula. Provincial spokesman Mlibo Qoboshiyane said that no amount of insults would deter party members from their decision to re-elect Zuma. He said Mbalula had descended into the lowest realm of politicking by relying on insults to sustain his popularity. "For a recent graduate from iBhoma (traditional circumcision school), Comrade Mbalula evinces high levels of disrespect. "Clearly, the lessons imparted to him are yet to percolate in his soul and mind, hence he acts contrary to what is expected from a man, especially a recent graduate," said Qoboshiyane. The two provinces have been the most vociferous supporters of Zuma's being retained as president of the ANC, and therefore the nation, for a second term. Limpopo, a province strongly linked to former ANC Youth League leader Julius Malema and said to be pro-Motlanthe , has called for Mbalula to replace Gwede Mantashe as the party's secretary-general.

23 October 2012 The Times Page 1 Graeme Hosken

Miners 'slain like vermin' For six hours, the tearful widow of one of the 34 slain Marikana miners stared at national police commissioner Riah Phiyega. Not even when graphic accounts of how the 14 miners were shot in the back or head by the police, or when it was related how injured miners were "extrajudicially executed", did Mary Fundzama lower her eyes. As details emerged at the Marikana commission of inquiry of how the police used a "hostage release" plan instead of generally accepted crowd management strategies to control 3000 angry striking Lonmin miners in the prelude to the bloodbath, tears rolled down her cheeks. An Eastern Cape father, whose son was among those killed, tried in vain to comfort her. The miners killed were among the thousands of Lonmin platinum miners who embarked on a wildcat wage strike in August. Their confrontation with the police ended in the death of 34 of them after a week of violence, that left 11 others - including two policemen and two security guards - dead. Several women broke down during the hearing when the police's lawyer, advocate Ishmael Semenya, admitted that their husbands' deaths were the result of "unjustifiable" shooting. Explaining the police's version of the August 16 tragedy, Semenya admitted that the police's crowd-control training was "inadequate" and that officers started shooting at the miners after hearing their colleagues opening fire. "Protesters ran to 'Koppie 3' - the police thought they were being fired on . and shot back in self-defence," said Semenya. "The police officers are prepared to accept that they might have been responding to 'friendly fire', believing it to be fire from the protesters. "Officers fired [in a periodof] virtually less than a heartbeat, on protesters . with live ammunition, without instruction, in circumstances where they believed their lives were in definite danger." Semenya said that because of a lack of forensic evidence, the police could not give an unqualified account of how 14 miners were killed on the site known as "Koppie 3" - which is dotted with large boulders and riven with crevices. "Evidence might reveal that the police - engaged in subtle diplomacy - acted with disproportionate force. The use of force was the last resort ... with tragic unintended consequences," he said.

Semenya said the police were focused throughout the confrontation and at no stage did they intend loss of life. "This was not a deliberate and brutal act by the police. They had no murderous intent ... Officers faced an imminent danger ... They responded to stop the protesters' intended bloodbath." Semenya laid the blame for the tragedy on the rivalry between the National Union of Mineworkers and the Association of Mineworkers and Construction Union, and on Lonmin management, which he accused of creating an "uncontrollable beast of violence". Phiyega's repeated light-hearted exchanges with colleagues during the early parts of the proceedings stopped as the families' legal representatives tore into the state's explanation of the massacre. Advocate Dumisa Ntsebeza, representing 21 of the families, demanded to know how the police could claim self-defence when 14 miners were shot in the back. "Post mortems show the backs of miners riddled with bullets. Harrowing statements of the extrajudicial execution of injured miners - all backed by medical reports - have emerged," said Ntsebeza. "Where was the threat? The police had superior firepower. The police justification is that the miners were possessed vermin whom they exterminated like vermin." He said no attempts were made to negotiate with the unions or their members. "They had no chance to surrender. The conclusion was drawn up days before ... death was the only outcome." He said Lonmin "escalated the violence". "They called on the government in a letter for it to use all available resources and bring all its might to bear on the strikers," Ntsebeza said. "The result is this - a mother now has to abandon her five children to fill her husband's position on the mine. Children have lost fathers to police and mothers to the mine." Advocate George Bizos, representing several families, said policemen interviewed had admitted that they had gone out to "shoot to kill". "They did this because of what happened to their murdered colleagues," he said referring to two policemen murdered by strikers days before the massacre."

He said: "Semenya admitted there was a plan ... he conceded the actions were unlawful." "The police claim self-defence from imminent danger but not one officer was scratched, never mind shot. We asked for their plan to deal with the strike ... they gave us a hostage situation plan ... a plan the police commissioner and police minister authorised." SA Human Rights Commission chairman Lawrence Mushwana said he was alarmed by the police's admissions. "They are very serious ... should further investigations be warranted they will be conducted." Centre for Applied Legal Studies head, Bonita Meyersfield, said the "admissions" could warrant further investigations with the possibility of civil and criminal actions. Lonmin's legal representative Schalk Burger refused to present evidence in his opening submissions saying it would not engage in fingerpointing.

22 October 2012 The New Age Siyabonga Mkhwanazi Sisulu cracks the whip Public Service and Administration Minister Lindiwe Sisulu has promised tough action against any senior manager in government who uses state information to benefit in business. Sisulu said that there were already tough measures in place preventing officials from disclosing government information to business. She said, in a reply to a question in parliament on Friday, that the government would not tolerate employees from securing private business by giving out state information. She said there were measures in place including the Ethical Code of Conduct and the senior managers’ Handbook that prevented officials from revealing state information in the private businesses they were involved in. She said the disclosure of government information into private entities would not be tolerated. Sisulu said it would be unlawful for any official to use state information in that way.

Relevant mechanisms had been put in place to ensure that this did not happen. The use of state information to score private business has not been reported to her as yet, she said. But if this were to happen strong action would be taken against those officials that were responsible. Government officials have previously been accused by opposition parties of conflicts of interest. The opposition has been calling for more regulation on officials who do business with the state. They have said that the government does not have measures to prevent these officials from doing business with the state. The government has tried to prevent this by getting its employees to declare their financial interests. Directors-Generals, Deputy DGs and other senior officials are required by law to disclose their financial interests every financial year. 22 October 2012 The New Age Sapa ANC pays tribute to Kumalo Acclaimed photographer Alfred Kumalo helped to end apartheid through his art, the ANC said on Monday. Kumalo's work spoke volumes, providing the international community with evidence of the brutality of apartheid, spokesman Jackson Mthembu said in a statement. As such, his work helped to mount international pressure against the apartheid regime. On Sunday night it was reported that Kumalo, 82, died from renal failure at a Johannesburg hospital. He was born in Alexandra, and made his name as a photographer for Drum Magazine. Mthembu described Kumalo's career as "industrious and illustrious" and "journalism in the highest form". "The ANC and the people of South Africa are forever indebted to Alf Kumalo for being at their service and striving to expose a system that was inhuman."

Mthembu extended the party's condolences to Kumalo's family and his colleagues in the media industry. Kumalo, who matriculated at the Wilberforce Institute in Evaton, began his working career as a journalist and photographer for Bantu World in Johannesburg in 1951. In 1956 he took up a permanent position at the Golden City Post. He covered historic events including the 1976 student uprising, the 1980s state of emergency, the unbanning of the liberation movements and the inauguration of South Africa's first democratic government. His career which spanned more than half a century. Despite his advanced age, Kumalo still worked professionally and ran a professional photographic school in Diepkloof. In 2004, Kumalo was awarded the Order of Ikhamanga, an award recognising his contribution to documentary photography and journalism in South Africa.Sapa

22 October 2012 IOL Gaye Davis, Cape Argus reporter SA not so bad, says Presidency Johannesburg - The Presidency moved to counter the negative publicity SA has been attracting abroad, with President Jacob Zuma’s spokesman, Mac Maharaj, insisting it was “grossly incorrect” to suggest SA was “on a downhill slide”. Maharaj was responding to last week’s cover story by the influential business journal The Economist, headlined “Cry the beloved country – South Africa’s sad decline”. The assertions in the article “cannot go unchallenged as they are so misleading”, Maharaj said in a statement issued on Sunday. “It is grossly incorrect to suggest that South Africa is on a downhill slide.” He said while two ratings agencies may have downgraded SA’s creditworthiness, many other countries had experienced the same fate. “It is a sign of the times. The world is going through a period of serious economic upheaval,” Maharaj said.

“Despite the challenges, South Africa is getting many things right,” he insisted.

The article notes: “According to the World Economic Forum, South Africa ranks 132nd out of 144 countries for its primary education, and 143rd in science and maths.” It also notes that since Nelson Mandela retired in 1999, the country had been “woefully led”. Maharaj said SA was privileged to have had Mandela as its first democratically elected president. However, this did not make the country immune from economic, social or political challenges, more so given the legacy arising from colonial oppression and apartheid, he said. “Despite the challenges, South Africa is getting many things right. “The economy possesses the necessary dynamism to position the country as a competitive player in a difficult global economic environment. In direct contrast to the Economist article, a strong vote of confidence on South Africa was given in the last week by the international business community with the country’s recent inclusion in Citigroup’s World Government Bond Index.” Maharaj said SA’s success was visible when benchmarking the country against other emerging market economies such as the Brics and Next 11 countries. “With regards to financial market development, South Africa ranks first among the Brics nations and third overall in the world.” His statement came as Zuma continued to come under attack at home, particularly over the spending of hundreds of millions of rand of public funds on his private homestead at Nkandla, KZN. United Democratic Movement leader Bantu Holomisa accused Zuma of underestimating South Africans’ intelligence and misleading the country by claiming last week that a large part of the work at the estate had been done by his family. City Press on Sunday said it had documents revealing that multimillion-rand payments to at least nine contractors had been authorised last Friday, just days before Zuma emerged from a summit of government, business and labour to address the crisis in the mining sector, where it was agreed that private sector executives would commit to a salaries and bonus freeze. But while “Nkandlagate” has provided the opposition a stick with which to beat the ANC, it is the wildcat strikes, violence and intimidation disrupting production in the mining sector that are causing jitters among investors and that prompted the critical assessments published last week.

The government also came under fire in articles in The Wall Street Journal, Washington Post and Financial Times following the decision by ratings agencies to downgrade SA’s sovereign debt rating. Cosatu has called on Police Minister Nathi Mthethwa to spur the police to get to the bottom of “the wave of violence, intimidation and killings of National Union of Mineworkers shop stewards and activists. Cosatu said it believed there was a concerted campaign to “wipe out” NUM in the beleaguered platinum sector.

21 October 2012 IOL Adam Habib (Deputy Vice-Chancellor at the University of Johannesburg) Why we’re facing more years of Zuma Who will be anointed king at Mangaung? The public discourse suggests that there is a contest for the crown between Jacob Zuma and Kgalema Motlanthe. But there can only be a succession race if there is an alternative contender, and Motlanthe has not yet thrown his hat into the ring. There is no doubt that he would like to contest for the ANC crown. And there are many in the ANC who would like to see the back of Zuma. But unlike Zuma, who had nothing to lose and everything to gain in the run-up to Polokwane, Motlanthe has everything to lose should he be unsuccessful in a bid for the ANC crown in Mangaung. Motlanthe will throw his hat in the ring only if he knows that it is a contest he will win. In this scenario, it is better to swallow your pride, defer the battle and position yourself for the presidency in 2017. But how do we account for the divisions within the ANC? Moreover, why do so many of its factions want to see an end to the Zuma presidency? The common explanation is that this is a struggle between patronage networks over the resources of the state. However, while there is an element of truth in this, what these explanations ignore is that this battle over patronage overlays a deeper ideological struggle about the meaning of development that goes back to the dawn of the democratic SA. Two visions of development have vied for supremacy within the ANC in postapartheid SA. The first simply imagines a deracialised capitalism, albeit with a poverty-alleviation focus.

It advances a conservative macro-economic policy agenda that emphasises deregulation, privatisation, low fiscal deficits, a BEE programme intent on creating a black bourgeoisie, and a circumscribed role for the state. The second envisages a deeper social transformation and the establishment of a social democracy. It focuses on transforming the economy through aggressive state intervention, an active industrial policy, the strategic use of parastatals, a broad-based black economic programme and an agenda to address poverty and inequality. The first of these visions prevailed between 1994 and 2007. It counts as its indicators of success a long period of moderate growth, low fiscal deficits and the stabilisation of the country’s macroeconomic finances. Its Achilles heel was its failure to address unemployment and contain inequality. This was used to delegitimise the Mbeki presidency, culminatingd in his defeat at the Polokwane conference in 2007. The second vision has come to dominate in the Zuma era. The Zuma presidency was thus explicitly built on the mandate of a deeper social transformation agenda and a broad-based black economic programme. Its legislative hallmarks were the New Growth Path and the Industrial Policy Action Plan 2, both of which emphasised targeting particular labour-absorbing industrial sectors for growth, driving small business development, expanding BEE beyond politically connected entrepreneurs, driving employment and containing inflation. The success of the programme, however, has been limited as a result of the global economic recession since 2008 and an internal political challenge from within the ANC. The contemporary factional problem within the ruling party originally lay in the alliance of forces that brought Zuma to power in Polokwane. As so many have said before, this was a coalition of the wounded. The left, institutionally represented by Cosatu and the SACP, was an important part of the coalition, but it also comprised African nationalists unhappy “with the climate of fear” under Mbeki, Zulu traditionalists who supported Zuma because he was one of their own, and a range of shady businessmen looking for their time at the feeding trough. It was a recipe for the factionalist politics that ensued. The opening gambit in the divide within the Zuma administration was the tussle over economic policy, reflected initially in the mandate of and commissioners appointed to the National Development Commission, and the battle over executive appointments in parastatals.

It is now reflected in the tensions (not contradictions) between the economic policy prescriptions of the New Growth Path and the National Development Plan. This primary divide, however, is overlaid by other divisions. A significant layer of the original left, centred on Zwelinzima Vavi, are unhappy at the enrichment and corruption that has not only continued but seems to have taken on an added impetus under Zuma. Modernist African nationalists have been turned off Zuma either by the indignity he has brought to the presidential office through his personal foibles or the instability in markets that his lack of leadership inspires. Other factions are led by ethically questionable politicians such as Bheki Cele and Julius Malema, who simply want revenge against Zuma because he was forced to take action against them for their failures. Still others are led by shady businessmen who are driven by the potential access to the state’s largesse. Zuma is, of course, not the best presidential candidate that the ANC can put up for a number of reasons. First, there is a tussle over economic policy reflected in some of the contrasting policy prescriptions reflected in the New Growth Path and the National Development Plan. These need not be mutually exclusive programmes and the tensions between them can be bridged. But this requires political leadership. Zuma has not yet demonstrated such leadership, and his delayed reaction to the mining strikes suggests that he has still not developed the political will to provide such leadership. Second, and related to the above, all commentators across the political spectrum recognise that the country is in urgent need of a social pact between business, labour and the state. But such a pact, which requires the moderation of popular expectations, will be realised only through adept political management. In particular, poor people’s expectations in relation to wages and the delivery of services are unlikely to be moderated so long as political and economic elites do nothing to contain their own excesses. Zuma seems oblivious to this and is incapable of providing leadership in this regard. His personal excesses continue, as is reflected in the latest scandal over the spending of R240 million on his homestead in Nkandla. Those around him are similarly immersed in scandal after scandal. In this context, the Zuma administration cannot, without being perceived as being hypocritical, call on executives in the corporate sector to display moderation in their own remuneration and consumption, without which the moderation of poor people’s expectations is unlikely to be realised. And so long as this does not happen, a social pact will be still-born.

Finally, the Zuma administration has been disastrous for the rule of law and the legitimacy of the justice system. Perhaps the most disappointing political figure in this regard is Jeff Radebe who, as Minister of Justice, has presided over the decline in the capacities and capabilities of the justice system. The only silver lining in an otherwise bleak political climate is the appointment of the Public Protector, Thuli Madonsela, who has revitalised her office and brought a measure of respect to the public institution. But even here, there are some within the ANC who want to drive her out of office. Despite these failings, Zuma will be elected president at Mangaung. The dramatic increase in ANC membership in KwaZulu-Natal and Zuma’s control over the offices of both state and the ruling party ensures that he will have the support of a majority of the delegates at the congress. The best hope for those unhappy with a Zuma presidency would be to negotiate a resolution to the succession race with a specially enhanced role for Motlanthe in the post-Mangaung administration. But if I was a betting man, I would not even put my money on this. For now, it seems it would be politically prudent to expect more of what we have come to experience in the last two years.

22 October 2012 Cape Times Page 1 Piet Rampedi Zuma politically bankrupt –Mbalula Johannesburg - Sports Minister Fikile Mbalula has gone on the offensive against President Jacob Zuma, claiming he was a “politically bankrupt” leader who married “every week”. Responding to allegations by Zuma’s lobbyists that he was an opportunist who wanted to switch allegiance because Deputy President Kgalema Motlanthe’s campaign was fading, an angry Mbalula said on Sunday he had no time for a leader who thrived on corruption. This came after some of Zuma’s allies told The Star at the weekend that Mbalula was not welcome in the president’s inner circle because he and Julius Malema had run an anti-Zuma campaign based on vitriolic and personal attacks rather than principle and leadership preference.

Mbalula dismissed as “propaganda” the Zuma camp’s claims that he agreed to back Zuma at a meeting at Luthuli House a fortnight ago. He said Zuma’s lobbyists were the ones pursuing him, but he rejected them because of the ANC president’s poor leadership qualities and questionable private life. The former ANC Youth League president said Zuma’s supporters had offered him the position of ANC deputy secretary or a spot in the party’s national executive committee (NEC) in exchange for his ditching anti-Zuma forces. Zuma’s spokesman, Mac Maharaj, declined to comment on Sunday, saying he did “not make comments on party-political matters”. He referred all enquiries to ANC national spokesman Keith Khoza, who said: “It is difficult for us, as the ANC, to comment because we haven’t spoken to the president, and neither did we speak to Mbalula. We are not even aware if the discussion between them did happen.” Mbalula has been tipped to take over as ANC secretary-general from Gwede Mantashe on the Motlanthe slate, but only Limpopo and the ANCYL have nominated him so far. Mbalula added that the Zuma camp said it did not want Mantashe, but were frustrated because of his [Mbalula’s] failure to back Zuma. “They came to me and offered me a position to neutralise me. Now that I am firm, they are spreading propaganda. They are lying that our campaign is fading. They are in for a shock. They realise that they can’t survive politically. They only survive on the basis of corruption.” The minister denied he had publicly insulted Zuma, adding that Malema had also highlighted a problem that already existed. “I delivered all of them in Polokwane, including Zuma. What can they tell me? People who suffer from political bankruptcy? I got where I am because I work hard. I have no time for Zuma. He has caused his own problems. He marries every week. He is building a mansion in Nkandla.” A pro-Zuma ANC NEC member said Mbalula had “a problem” because he was probably the only minister in the world who had stood on a podium and insulted a sitting president who had appointed him. “The problem is they thought the campaign against the president will gel, and it didn’t. So even if they change their minds, it will be opportunistic. It will not be sincere. “Their problem is that their campaign was based on vitriolic attacks. You just wake up and decide to insult the president,” said the NEC member.

The source hinted that Mbalula could be in a different post after the ANC’s December elective conference in Mangaung, if Zuma is re-elected. But any reshuffle would be based largely on Mbalula’s work rather than preconference leadership preferences.

22 October 2012 Business Report Page 1 (Lead) Asha Speckman Acquisitions in SA now unattractive SOUTH Africa will have to forego any hopes of grabbing international interest in mergers and acquisitions (M&A) in the immediate term as investor interest slips further due to labour turmoil and the ANC’s succession battle fuels unease, according to analysts. As leaders fail to address the fallout from the ongoing labour unrest, investor attention has shifted to other corners of the continent that are fast emerging as economic rivals. Already, South Africa ranks as the least-favoured destination for M&A among emerging markets and the Brics (Brazil, Russia, India, China and South Africa) group of nations, according to Thomson Reuters data pooled over the first nine months of this year. The total value of announced M&A activities in emerging markets slipped 7 percent year on year to $465 billion (R4 trillion) between January and September. Although the overall decrease may be an indication of caution in light of global economic conditions, South Africa appears to be the worst-performing locale for deal making during the period. Of the top 10 targeted emerging market nations, South Africa comes in last with an aggregated $7.3bn in deal value reported during the nine months. In comparison, Chinese targets are the most favoured and the country realised 2 388 transactions with a total deal value of $115.3bn. Frontier Advisory Services chief executive Martyn Davies said investor interest had shifted rapidly to west and east Africa, particularly to Nigeria and Kenya. “This was particularly evident at this year’s World Economic Forum Africa summit that was held in Ethiopia. Interest in South Africa was definitely down, despite its strong capital markets,” he said last week.

“The South African government and related political actors need to take a long cold shower and begin to realise that we need to restore investor confidence – both local and foreign – and kick-start growth in the economy. The outlook for M&A will thus be subdued over the short term, again negatively impacted upon by unfortunate political rhetoric and perceived risk in the country’s political system.” To make matters worse, the highly influential global newspaper, The Economist, whose readership comprises presidents, business executives and world decision makers, has published a scathing analysis that posits South Africa, once the pride of Africa, as a nation that is on a backward slide. The newspaper argues that South Africa is sliding downhill while most of the continent is clawing its way up. Richard Hurst, a senior analyst for emerging markets at Ovum, said: “The outlook for M&A over the next 12 months looks bleak due not to the fact that there is no value in South Africa or South African companies, but due to the overarching political instability that is emerging with industrial action leading to violent and tragic consequences. This is likely to place any potential foreign transaction on hold until these matters are concluded.” The government’s intervention in retail giant Walmart’s purchase of Massmart and its hand in the failure of Telkom’s proposed equity sale to Korea’s KT Corporation left a bitter taste for anyone looking to South Africa, analysts said. To be sure, Hurst said state interference pointed to the government’s desire to keep strategic business interests in South African hands and was no different to similar policies from countries that include Australia and India. The top 10 deals captured in Thomson Reuters’ third-quarter M&A report involving South Africa are mostly in the material, metal and mining industry. Within telecoms the proposed tie-up between MTN and India’s Bharti Airtel was scuppered after suspected government meddling. Industry analysts have, however, not ruled out potential interest by the likes of China Telecom, whose presence outside its home base was scant. There have also been suggestions that smaller players 8ta and CellC might be candidates for some deal making. International Data Corporation programme manager for telecoms in Africa Spiwe Chireka said South Africa was ready for M&A in the local telecoms market. “Because of the less mature competitive landscape, we haven’t seen M&A we’d like to see.” Frost & Sullivan information and communications technology analyst Chantel Lindeman said South Africa’s mature telecoms market led investors to focus elsewhere in Africa. She forecast greater M&A activity and said that the next 12 months could yield M&A activity in niche markets such as content providers and mobile applications.

22 October 2012 Business Day Page 4 Evan Pickworth Number of wealthy in SA up 31%, says Treasury DESPITE economic uncertainty, the number of wealthy people in South Africa is rising by as much as 31%, with a senior banker saying last week that the longer-term trend of South Africans moving into the wealthy bracket is set to remain firmly in place. A Treasury document ahead of this week’s medium-term budget policy statement shows about 102,050 taxpayers will earn more than R1m in taxable income in 2012-13. The wealth market in South Africa is growing at a rate of 31%, up from 19% growth in 2010, and an average of 23% growth over the last three years, according to head of RMB Private Bank, Gavin Tarr. "I doubt that rate will be maintained, but this will likely be an area of the economy that will grow faster than inflation ," he said. This rate is not far off the 29% growth seen since 2006 in centamillionaires ($100m) globally, according to The Wealth Report 2012 published by Knight Frank and Citi Private Bank. A reported 63,000 people worldwide now have assets of $100m or more. But the number of centamillionaires is expected to rise even further — by 37% from 2011 to 20 16, according to the research.’s Mike Schussler said the increase in the number of wealthy people in South Africa was probably due to a recovery in the market after the 2009 crisis, property prices halting their slide and incomes doing better.

22 October 2012 Business Day Page 3 Natasha Marrian Reinstate all dismissed strikers, says Cosatu THE Congress of South African Trade Unions (Cosatu) is demanding the reinstatement of all workers dismissed during a wave of unprotected strikes,

saying the illegal action should not be used as a guise to "downsize" mining operations, its general secretary, Zwelinzima Vavi, said on Saturday. The wave of wildcat strikes in the mining sector comes at a time of global economic turmoil and has weakened South Africa’s growth prospects, with President Jacob Zuma releasing a package of interventions in an attempt to restore stability. A t Lonmin’s Marikana operations the unrest saw about 50 people killed, 34 in a bloody standoff with police. The judicial inquiry to get to the bottom of the unrest, which unfolded in August at Marikana, resumes in Rustenburg on Monday. Cosatu estimated that more than 15,000 mineworkers had lost their jobs during the wildcat strikes. Speaking at a media briefing at Cosatu’s Braamfontein headquarters on Saturday, Mr Vavi said a special sitting of Cosatu’s top brass last week agreed that solidarity action by all the federation’s affiliates would be taken to support the demand for the reinstatement of these workers. All Cosatu affiliates would convene workplace general meetings to discuss the nature and the timing of the action. "Already the response of the bosses to the strike is to dismiss workers, then re-employ them and to cut substantial numbers of them out," Mr Vavi said. "That strategy may be part of a strategy to downsize in order to protect profit margins … we cannot close our eyes to this reality that employers are taking advantage and downsizing; mechanising in a manner that is going to just compound the bigger problem of unemployment in South Africa." Mr Vavi said Cosatu was worried about this phenomenon. "Our take, even as the strikes are unfolding, is to push for the settlements so that we can go back to normality as soon as possible." National Union of Mineworkers (NUM) spokesman Lesiba Seshoka said the dismissals started with Impala Platinum at the beginning of the year, where 16,000 workers were dismissed, and only 14,000 rehired. He said Anglo Platinum had already dismissed 12,000 workers, Bokoni Platinum dismissed 2,000, and Gold One had dismissed 1,800. Mr Seshoka said the NUM believed the unprotected strikes were being used as an excuse to downsize as it had received section 189 notices from Gold Fields and Anglo Platinum earlier this year. The notices served to inform unions about possible retrenchments due to "operational requirements".

Mr Vavi said South Africa was aware of the continual decline in the number of workers employed in the gold and diamond sectors, due to the depletion of resources, increased mechanisation, and instability in commodity prices. In the platinum sector, employment opportunities almost doubled in the past 10 years. "First, the demand for platinum in the industries is on a decline. Second, China, India, and Brazil are cooling off economically and we (are) now operating in a five-year period of global crisis that has a profound impact on the South African mining industry, as well as the rest of the industries," he said. All these factors could lead to a decline in the number of workers employed in the future. In a statement released on Friday, Gold Fields said about 8,500 workers at its KDC East shaft remained on an unprotected strike. Workers had to report to work on Monday or face dismissal. In a statement last week, Anglo Platinum said it would "delay" the dismissal of workers at its Union and Amandelbult mines to give negotiations a chance. However, it would not reinstate the 12,000 workers already laid off in Rustenburg.

22 October 2012 Business Day Page 2 Setumo Stone Marikana inquiry to start after much delay THE Farlam commission of inquiry into the labour unrest at Marikana gets under way this week in Rustenburg after stalling for weeks because of logistical problems. The delay raised concern that the commission would not meet its four-month deadline allocated by President Jacob Zuma. Hearings were expected to take place all week, but there were problems with bookings at the venue, the Rustenburg Civic Centre. The hearings would therefore take place on Monday and Tuesday, said commission spokesman Kevin Malunga. About 50 people have died at Lonmin’s Marikana operations since August, 34 after the unprotected strike led to a confrontation between police and workers.

This week’s hearings will focus on evidence reports — postmortem and ballistics reports and video footage of the deadly incident. The wildcat strikes have spread to other mines, with workers demanding a salary of R12,500 or more. The Congress of South African Trade Unions (Cosatu) estimates that more than 15,000 workers have been fired so far. Mr Malunga said the commission’s deadline was a side issue. Its primary focus was to ensure it fulfilled its mandate to look into the role of, among others, trade unions, mine bosses and police in the deadly strike action. Cosatu will hold a rally in Rustenburg on Saturday to seek a resolution to the continuing dispute between mine bosses and workers. The Democratic Alliance (DA) gets into election mode this week. It announced nominees last Tuesday for the seven posts that will be contested at a federal congress next month at which party leader Helen Zille will be among a few guaranteed re-election. At least 13 of 18 of those nominated for national leadership positions were expected to begin their campaigns this week. Finance Minister Pravin Gordhan will table the medium-term budget policy statement in Parliament and make a speech on Thursday. The African National Congress (ANC) continues with branch meetings to nominate candidates for national leadership positions at the party’s national electoral conference in Mangaung in December. The process began early this month. A ruling in a court case, which could affect the December conference, will be handed down on Friday. Six ANC members asked the Free State High Court to declare the province’s June electoral conference void due to alleged irregularities. With Natasha Marrian

22 October 2012 Business Day Page 1 Sam Mkokeli Zuma rebukes media over criticism as Mbeki joins in AFTER years of silence on domestic politics, former president Thabo Mbeki has criticised the leadership of the man he failed to prevent becoming South Africa’s president.

But history shows that Mr Mbeki’s views are going to be pooh-poohed by a government that cannot live with criticism. Hours before Mr Mbeki gave the memorial lecture in honour of former African National Congress (ANC) president OR Tambo on Friday, Mr Zuma showed how thin-skinned he can be. Speaking at a summit on infrastructure development, Mr Zuma said negative media coverage and over-the-top criticism by opposition parties harmed South Africa’s image as an investment destination. Infrastructure development is one of his administration’s key tools to grow the economy and create jobs. But the ambitious plan — R4-trillion of public and private sector projects over 15 years — relies on South Africa being seen to be stable and predictable. The government plans to raise funds for some of the projects overseas. But two successive downgrades by two ratings agencies in the past month, essentially because of weak leadership, mean credit will become more expensive for South Africa. Mr Zuma’s administration feels greatly unappreciated — what officials see as accomplishments do not make the headlines. An example is last week’s high-level dialogue, which Mr Zuma organised to deal with post-Marikana South Africa. After two meetings, a raft of measures to save South Africa’s image, and other plans to fight poverty, were by and large ignored by journalists. Instead, the media generally latched on to the call for bosses to forgo salary increases for a year. That angle was met with dismay by those in power, who feel their best efforts are going unnoticed. "I have noticed that some sections of the media and commentators have decided to focus mainly on the call for top earners … to agree to freezing salary increases and bonuses," said Mr Zuma. "We have released the full package agreed to publicly and it definitely goes beyond salaries and bonuses," he said. But that was just a precursor to a more peculiar statement — about the media and opposition parties shooting down South Africa. "We have to create the right environment for economic growth," Mr Zuma said. "During this period of a global economic downturn, we urge those who have access to the media from all sectors, including opposition politicians, to stop talking our country and economy down. "

Mr Zuma wants a common understanding between the government, media and the opposition that criticism should be measured to avoid depicting South Africa badly to outsiders. His government’s assumption is that outsiders cannot see for themselves what is happening in South Africa. In fact, this is an old argument, also made by Mr Mbeki: that the media should work to promote South Africa’s political agenda, instead of reporting and commenting on what they see. Mr Zuma says opinion makers should also highlight successes achieved since 1994 — for example, the consolidation of democratic institutions, 3-million social houses and government grants for 15-million people. Down in the Eastern Cape, Mr Mbeki was less positive about South Africa’s future: "I, for one, am not certain about where our country and nation will be tomorrow, and what I should do in this regard, to respond to what is obviously a dangerous and unacceptable situation of directionless and unguided national drift." Mr Mbeki’s own leadership successes and failures will come under scrutiny next month, when the ANC dedicates November to his legacy. Those wanting to replace Mr Zuma will look to use Mr Mbeki’s record to show up Mr Zuma’s thin-skinned government as a failure. This is just the beginning.

22 October 2012 Business Day Page 1 Allan Seccombe Anglo boss urges tough line to halt mine unrest THE mining sector will remain in turmoil until the government takes a firm stance to ensure that normality returns, says Anglo American CE Cynthia Carroll. Ms Carroll was in South Africa last week for a series of high-level meetings with government ministers and officials to impress on them the damage the unrest is doing to South Africa’s image among investors abroad, and to make the point that "law and order" had to take priority. She said on Friday the labour unrest could not have come at a worse time for the platinum industry, and it would take a fresh and collaborative approach by all mining companies to resolve underlying causes.

Of the world’s biggest diversified mining companies, Anglo has the greatest exposure to South Africa. Two of its key operations in South Africa — Anglo American Platinum and Kumba Iron Ore — have been hit by the strikes flaring since August, leading to billions of rand in revenue losses. Thousands of jobs have also been cut. Ms Carroll met Finance Minister Pravin Gordhan and Mineral Resources Minister Susan Shabangu. She said the two ministers understood the seriousness of the damage being done. "What we are looking for right now, the starting point, and what we’ve been really reinforcing in our meetings with the government, is law and order. It starts with law and order," Ms Carroll said, in her first public comments on the strikes. Mr Gordhan and Reserve Bank governor Gill Marcus have warned of the negative effect the strikes would have on South Africa’s growth outlook and jobs. Ms Shabangu has said investor sentiment is being damaged by the strikes. "We are very committed to this continent and South Africa. This is where our roots are and where we have our largest concentration of employees. Fundamentally, I believe in the country and the ministers I’m dealing with are great. They want to do the right thing," Ms Carroll said. "They have a sense of urgency and they understand this is ultra-serious and that the solutions will not come from one organisation or the private sector … and we need to get on with dealing with these issues together. It will be about engagement," she said. Asked what was behind the well-organised strikes that flared up quickly and in similar fashion at a variety of mines, she said: "I don’t know. I don’t think anybody really knows. This is a very unusual set of illegal strikes that are happening. There’s got to be some element of politics at play." Amplats, 80% owned by Anglo, has fired 12,000 staff from its Rustenburg mines for refusing to return to work and said they would not be reinstated, a message Ms Carroll hammered home. "We will not accept criminals in our organisation. We will not accept people intimidating or killing people, burning them alive. We had that happen last week. It’s brutal and it’s gruesome. It’s completely, completely outrageous to suggest the mining industry is doing all the wrong things. This is just not right," she said. "We (the mining industry) need to do more but it’s not going to happen under these kinds of circumstances. We will not have open, constructive, collaborative sort of dialogue and thinking. It is combative, it’s pure intimidation and threatening in every sense," she said.

Rating agency Standard & Poor’s last week revised its outlook on Anglo to negative from stable. "Our view is that Anglo American’s business risk profile is weakening because of rising South African country risks," the rating agency said. "Our reassessment of South African country risk follows the recent series of strikes and increased underlying social tensions and inequalities, which translate into a weaker business and investment climate in our view." Ms Carroll said the first question she heard from investors now was about South Africa and how the matter would be resolved, making it one that could not be answered "with a lot of ease". "It’s top of mind and they are very preoccupied, wondering where this is going to lead, how do things get back under control and how we regain confidence and credibility? The S&P and Moody’s ratings are not at all helpful in this regard," she said. The South African platinum sector was in a loss-making position before the labour unrest started at Lonmin and spread to other mines in the Rustenburg area before spilling over into gold, iron ore and chrome. Commodity markets are weak, with a slowing Chinese economy, and poor performances in the US and European economies. "That’s the environment today for all of us. Prices are way down for the most part ," she said. "More specifically on platinum, this is not the time to be fooling with the platinum industry. "My biggest worry, and I’ve said this to the government, is that it puts the platinum sector at risk. We need to ensure a long-term, competitive industry. We can’t have a situation where an operation is here today and gone tomorrow. We can’t accept that or tolerate it," she said. "We can’t have customers wondering what is going on in South Africa, with all these people walking out and not going back to their jobs. How dependent on this industry can they be if that’s how it’s going to be," she said. BHP Billiton, the world’s largest resources company, has warned that demand for commodities that go into making steel is slowing as growth in China cools, lowering its estimates to 7%-8% this year. "In effect, what this means is that the record prices we experienced over the past decade, driven by the ‘demand shock’, will not be there to support returns over the next 10 years," CE Marius Kloppers said last week.

22 October 2012 The Times

Page 4 Thando Mgaga and Zine George Cosatu out for Mbeki's blood Former president Thabo Mbeki's criticism that the ANC lacks leadership continues to evoke mixed reactions. Cosatu president S'dumo Dlamini has slammed Mbeki for saying the ANC was failing to provide direction to the country, and challenged him to demonstrate what he had done to provide leadership for the party. But ANC Youth League president Ronald Lamola said the greatest mistake society and the ANC had made was not to listen to Mbeki's "silent advice". This had left the ruling party "limping". Speaking to Young Communist League members at the University of KwaZulu-Natal's Pietermaritzburg campus on Saturday, Dlamini said Mbeki's comments were an attempt to "poison" South Africans by insinuating that the ANC leadership was directionless. Mbeki, in his first speech at an ANC event since he was fired from the presidency by the party in 2008, said he was not certain about "where the country and nation will be tomorrow", or about what he should do "to respond to what is obviously a dangerous and unacceptable situation of directionless and unguided national drift". Delivering the Oliver Tambo memorial lecture at Fort Hare University, Eastern Cape, Mbeki described Tambo as a revolutionary leader who fought for the country's liberation without expecting anything in return. He challenged the ANC's leaders to follow in Tambo's footsteps. Dlamini said Mbeki had been asked to remain a member of the national executive committee of the ANC but had refused. He questioned why Mbeki now sniped at the current leadership. "... Now we will not accept it when there is an insinuation or a direct pronouncement that our country is directionless or leaderless . I want to challenge the former president [about] what is he doing right now to provide the leadership he says this country does not have." Lamola, speaking at the memorial lecture, said: "As society and members of the ANC we did not take [Mbeki's] silent advice and, as a result, the organisation today is limping from one disaster to another. The country is also limping from one disaster to another. The current wildcat strikes are a reflection of inequalities in society." Lamola was referring to the illegal strikes gripping the mining industry.

Dlamini cautioned Deputy President Kgalema Motlanthe not to take on President Jacob Zuma at the ANC's national elective conference in Mangaung. He said that Zuma, Motlanthe and ANC secretary-general Gwede Mantashe were identified ahead of the party's Polokwane conference in 2007, and now ahead of the Mangaung conference, as anchors of the national executive committee leadership . "... If he [Motlanthe] takes something else [other than what] he has, then he would have himself defined himself [as being] outside the anchor definition. All along in Cosatu we have been clear that Zuma, Kgalema and Gwede formed what was the anchor which represented the attributes of what we sought Polokwane to be," Dlamini said. He said Cosatu supported continuity in the ANC leadership.

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