A July TED talk by Johan Rockström, director of the Potsdam Institute for Climate Impact Research, had already reached 648 293 views at the time of writing. It is not a good-news talk.
Essentially, the scientific assessment is that the average ocean temperature is rising dangerously and some of the earth’s key natural systems of absorbing carbon are at tipping point.
A worker from the Thuru Lodge Game farm walks towards the carcass of a dead animal at the Thuru Lodge Game farm near Groblershoop, Northern Cape, South Africa. After several years of drought, animals die after becoming weak. Photo: Guillem Sartorio/AFP
In other words, places like the Amazon are at risk of being transformed from forest to savannah because of deforestation. It is no secret our global systems of producing and consuming food and appliances are costly for the planet, and those costs are not properly reflected in national accounting systems.
To put it technically, the negative externalities associated with production are typically offloaded onto those who can least afford it. Elites, meanwhile, will pay for air conditioning as temperatures soar beyond 50°C in many cities and continue to jet around the world in planes powered by fossil fuels.
Rockström is not entirely pessimistic, though, and exhibits some faith in the ability of renewable energy to help us move towards “net zero” by 2050, if we combine this with workable marine and terrestrial protection to safeguard the integrity of our carbon sinks and avoid massive biodiversity losses.
Basically, we need to move back to a situation where the earth can safely absorb our carbon output. We are not on that trajectory. So, what could mining and green industrialisation possibly have to do with this gloomy truth?
At Good Governance Africa (GGA), we recently proposed a 10-point priority plan for the incoming government of national unity (GNU) or “grand coalition”. In addition to ensuring the basic building blocks of democracy, such as improving political accountability and ensuring greater citizen engagement, democracy must also deliver material dividends. This is not easy to achieve in the context of adapting to climate change, alongside mitigating its causes.
Nonetheless, the world will require more mining in the future, not less, to provide the minerals and metals crucial to products (like solar panels and electric vehicles) that power the renewable energy and transport revolutions underway.
For South Africa, this has serious implications. We therefore wrote this into our 10-point summary:
Unlocking mining and industrial potential
The problem: South Africa’s mining industry has been deteriorating in terms of its direct and indirect contribution to GDP over the past two decades.
While it has occasionally earned well and bolstered the treasury’s finances through foreign exchange revenue from exports, the overall trajectory of investment in mining has been a decline.
While several sectors outside of gold have grown nominally, the potential appears vastly underutilised. This is attributable to numerous factors but poor mining policy, deteriorating infrastructure and dysfunctional ports, rail and road (logistics) are among the most urgent requiring attention.
GGA’s recommendation to the GNU: Pay close attention to the internal and external factors that determine the lack of exploration and expansion investment in mining.
A key approach will be to thoroughly reform the minerals governance landscape in the direction of making it far simpler to apply for (and be granted) licences, at the same time as reforming the department of mineral resources to enforce the law far more consistently across provinces.
The department should, similarly, work closely with other departments to remove macro-level obstacles to investment in the sector.
We must go beyond this, in time, and connect mining to green industrialisation. This is because industrialisation remains the optimal channel through which to absorb labour.
In less technical terms, South Africa has to (re)grow its industrial base if it is to achieve job growth.
Jobless growth is not an option, as growing joblessness entails untenable socio-political costs.
At an overall formal unemployment rate of 33.5%, according to the latest data, the call for economic reform could not be more urgent.
Technical work we’ve done at GGA shows Southern Africa is almost certainly suffering “premature deindustrialisation” — a decline in the manufacturing industry (in terms of both output levels and share of overall economic employment) sooner than our industrialised counterparts and at lower levels of per capita income.
Our move into services is relatively low value and not sufficiently labour absorptive.
South Africa specifically appears to be suffering from “Dutch Disease” — even though mining has declined as a sector, mineral rents (a high dependence on mineral sales and exports for foreign exchange and tax revenue, respectively) still appear to be causally related to declining manufacturing.
Ironically, the solution is more mining, not less, but mining has to be more directly connected with industrialisation.
This is not a simplistic matter of trying to “beneficiate” the raw materials produced in the country, though that could be part of the rationale, where sensible. For instance, it makes sense for South Africa to produce catalytic converters.
It remains true, of course, that Finland did not become a global furniture manufacturer just because it had vast natural forests. It turns out it didn’t excel in furniture at all. However, it did develop cutting-edge tree-cutting technology, which ultimately resulted in firms such as Nokia taking off.
These are what economists call “side-stream” linkages.
There is also extensive upstream manufacturing opportunity, which South Africa once boasted in abundance. Every effort needs to be made to recraft an industrial sub-sector specialising in mining equipment.
Because of the closeness of the “product space” to other forms of manufacturing, such as passenger or freight vehicles, the economic spillover effects could be significant.
All of this will remain ethereal unless appropriate and credible conditions for investment are created. That means we must continue to address our energy shortage in a systemic and sustainable way. No investment without reliable energy.
Similarly, logistics — all infrastructure, roads, rail and ports — need to be optimally tuned to attract labour-absorbing investment. And perhaps it goes without saying crime, from petty theft to extortion to grand corruption has to be radically removed.
To bring it full circle, lasting solutions to these problems need to be birthed in the soil of much greater levels of political accountability.
This article first appeared in the Mail & Guardian.
Dr Ross Harvey is a natural resource economist and policy analyst, and he has been dealing with governance issues in various forms across this sector since 2007. He has a PhD in economics from the University of Cape Town, and his thesis research focused on the political economy of oil and institutional development in Angola and Nigeria. While completing his PhD, Ross worked as a senior researcher on extractive industries and wildlife governance at the South African Institute of International Affairs (SAIIA), and in May 2019 became an independent conservation consultant. Ross’s task at GGA is to establish a non-renewable natural resources project (extractive industries) to ensure that the industry becomes genuinely sustainable and contributes to Africa achieving the Sustainable Development Goals (SDGs). Ross was appointed Director of Research and Programmes at GGA in May 2020.
