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FIFI PETERS: DRDGold came out with its [interim] results today, also issuing us with some real, real talk on how it felt South Africa’s economy was being run right now, essentially saying that the state is in consistent default of its constitutional mandate, and the state has become a threat to the economy and the quality of life of ordinary South Africans. So a very big and bold and critical statement to make about the state right now.
I asked DRDGold CEO Niël Pretorius, to expand on this and explain what it meant for his company.
NIËL PRETORIUS: I was trying to be unambiguous and not controversial or sound like I’m accusing anybody of anything. But the fact of the matter is that if you look at the primary responsibility of government, of the state – in terms of just quality of life and the role that it is required to play in terms of growing the economy, the environment, and what the environment is required to create for economic growth – Eskom is in dire straits and Transnet is in a complete mess.
As a consequence, ordinary South Africans who are working hard every day have to go back home from work with no traffic lights, [navigate] potholed roads, and then arrive to a dark house. The ones who have to make use of public transport don’t have access to decent public transportation. The Transnet system has collapsed. The commuter trains no longer run, and nothing’s being done about these criminals who are systematically destroying public transportation.
So the question that we ask is: When is this going to change?
When are we going to see something decisive being done about this in order to change the quality of life of ordinary South Africans for the better, and in order to create an environment within which the economy can grow and where it’s safe to deploy the sort of capital that we are deploying, without having to also invest capital in these gaps that have been created by state neglect?
So that’s really the line that I’m taking. It’s not intended to be disrespectful or demeaning or anything, but these are genuine concerns.
We employ 3 000-odd people. Many of them have to make use of public transport to get to work every day, and it’s a mess.
They’re not allowed to drive together, two or three in a car, if it’s on a taxi route – or they get pulled off and get intimidated, and nothing gets done about it. The reason why they have to do that in the first place is because the buses and the trains simply no longer work, and there doesn’t seem to be anything being done in order to restore them. In fact, [it’s] free rein to the taxis.
FIFI PETERS: I think essentially you’re telling it like it is, just to leverage off the point that you made that you are not trying to be disrespectful, but rather truthful. I just wanted to ask for some further colour as to how the state in its current form has been impacting your business. You have spoken about the impact it’s having on your employees and the difficulty for some of them to get to work safely. But in terms of the overall operations, what has the impact been?
NIËL PRETORIUS: Well, obviously electricity is the biggest issue in the sense that we now have to invest north of half a billion rand this year, and ultimately in excess of a billion rand, two billion rand, in order to have access to reliable power.
We produce gold, so obviously our product gets flown out of South Africa to our market, also from our operations. So we are not reliant on wagons for bulk commodities. We’re not reliant on the railway system and the ports, but the industry is taking some significant economic body blows, because the Minerals Council estimated that R51 billion last year was lost in revenue because of bottlenecks and logistics.
Now a company cannot survive all by its lonesome self. You need an industry, because then you create scale for suppliers, for engineering supplies, and so on.
Therefore companies may have to close their doors and we may have to end up having to import essential components and parts. The local economic support structure may ultimately suffer if scale is reduced as a consequence of the fact that there isn’t a logistical line in terms of which we can get our product out.
So, by and large, it’s the electricity issue, it’s the logistics issue and the impact that these are having on the industry. And then of course there is the safety of people, the safety of staff commuting to work, and safety at work.
Cable theft is no longer cable theft, it has now become cable robbery. People are getting shot at if they want to intervene or prevent copper cable theft from taking place.
We’re not really seeing a special regime being rolled out, specialist units with specialist prosecutors, and rules applying to people who are committing for all intents and purposes acts of sabotage and subversion by destroying public infrastructure.
We’ve got to step in and start fixing these things, the roads as well. How many people are getting injured, how much damage and loss are we suffering because cars are hitting potholes – especially now that it rains and potholes are filling up with water. You don’t see them, and you drive straight into them. People are dying on our roads.
Smaller towns out in the urban areas are not getting serviced because, firstly, the railway line into that town no longer exists, and hasn’t existed for years.
And trucks are finding it harder and harder to take supplies into those villages, so they die. We are seeing these dark spots developing across our landscape and ultimately they’ll be around us in the cities as well.
FIFI PETERS: The government has recently tried to resolve the electricity issue, in fact last year lifting any limitations on companies generating their own power. I can see that DRDGold is also taking advantage of that. But [government] more recently announced interventions to potentially allow SMEs to [borrow] from the government, households to [borrow] to install their own solar power and all that, with potential tax breaks.
How is it going for you, though, in terms of setting up your own power-generation capacity? Is everything on track?
NIËL PRETORIUS: Yes. We are on track. The delays that we are experiencing are delays in sourcing suppliers, because there’s such a huge demand for these things. We had delays up until late last year, also in terms of getting some of the permissions put in place. But you just have to keep at it. You have to push forward in doing that.
So with the business it’s actually going remarkably well, despite the electricity issues. Despite the weather and some regulatory delays that we experienced, the business actually did quite well.
Plants are functioning well, and our teams are committed and work really hard. That’s why we want to continue to invest in this. That’s why we’re not keeping quiet about this.
That’s why we are saying there’s so much at stake here that we simply cannot allow it to go to waste, we have to look after this. We have to reverse these trends.
We’ve got to call our public officials to account and get them to do their work so that we can reverse these streams. Ordinary South Africans are having a tough old time out there, and their money is not buying them a lot. Everything is getting more expensive, and they’re arriving in dark homes from potholed roads with traffic lights that are not working. It’s unfair, it’s not how it’s supposed to be.
It’s unfair that you have to use a taxi that’s uncertain, and that you can’t use a bus or a train because it no longer exists, and no effort is being made to fix it.
It’s just not fair, not after 30 years of democracy and working towards this democratic ideal that we set out to achieve 30 years ago.
FIFI PETERS: We’ve just come from the State of the Nation address last week, the blueprint of the current state of what the country looks like, and the plans to make it look better. On the plans to make it look better, have you confidence in the blueprint, in the map that this government is looking to follow – and would you add anything to it?
NIËL PRETORIUS: I would do two things.
I would firstly suggest that government gets out of the way, that they no longer stand in the way and slow things down.
Let the private sector get on with it because the execution capacity in government has been eroded to the point that it doesn’t exist.
And secondly, government should focus on law and order, fixing criminality, and start locking up criminals. We cannot have people plunder public infrastructure. It’s become a big issue. Our grid is being destroyed, Transnet’s infrastructure is being destroyed.
There’s a sense of lawlessness that’s just not being addressed. Talking about it and saying how concerned we are about it is not doing anything.
We have to actually start deploying competent people. Firstly, put a competent person in charge, and then start deploying competent people to address these issues. These criminals have got to be locked up and not allowed to get back onto the streets just to continue what they were doing the day before and the week before. And protect your citizens.
FIFI PETERS: We got that. It’s perfectly fine, the passion that you have [for] the economy right now, for making it better for all and [a safer place] for all to live in.
But we’ll have to leave it there, sir. Thanks so much for your time. Niël Pretorius is the CEO of DRDGold.