ECONOMY-SWAZILAND: Loosening the Reins on Mineral Resources

By James Hall Reprint | | Print |

James Hall

MBABANE, Mar 17 2004 (IPS) - The exploitation of Swazi mineral resources has long been a sensitive area of debate, as the colonial era saw a considerable portion of these resources being depleted by foreigners. However, the overtures of a South African businessman might be about to change all that.

Ironically, the hold that mineral resources have on the national imagination is not equaled by their contribution to the economy. Once Swaziland’s only foreign export, mineral sales accounted for just 0.8 percent of gross domestic product in 2002, the last year for which figures were available. This is just a fraction of the contribution made by other business sectors.

Other than some quarried stone that is used in local highway construction, coal is the only mineral still produced in the country. Swaziland’s gold deposits were largely depleted in the nineteenth century, while diamond production ended in 1997. Asbestos was mined north-west of the capital, Mbabane, from 1939 – but the last fibres were removed in 2001.

In addition, the Ngwenya Iron Ore Mine ceased production in the 1980s, although a railway built to transport ore out of the country en route to Japan continues to ferry coal.

All Swazi coal – which is currently sold in South Africa – is produced in one mine that contains an estimated 20 million metric tones of coal, and has a lifespan of approximately 20 years. Authorities have been very cautious in granting licenses to extract what other minerals remain.

“It has been a long-time struggle against the resentment of the colonial legacy, whereby the British and other whites took away the Swazis’ mineral wealth,” a source at the Bureau of Mines in the Ministry of Natural Resources told IPS, adding “It is hoped they will find the confidence in our black brother from South Africa.”

This brother – or “mining guru”, as he is being lauded in the press – is Patrice Motsepe, who has applied for a license to prospect for gold in the northern Hhohho region. He may also be looking to purchase one of the existing mines that are currently not in production.

“I can confirm that Motsepe is engaged in talks for the purposes of re-opening one of Swaziland’s closed mines. It is premature to say which one,” Swazi businessman Mpheni Dlomo, who recently hosted Motsepe in the country, told a press conference. Dlomo is Chairman of the MPD Group of companies which hopes to enter into a partnership with Motsepe.

The shuttered mines that Motsepe may consider include two coal mines – and the old Dvokolwako diamond mine. Until its closure Dvokolwako operated as an open cast mine, as it was deemed unprofitable to exploit the underground diamond reserves. However, new and improved mining technology may make that task less difficult – and also allow the operators of Ngwenya Iron Ore Mine access to more deposits.

Motsepe is already reported to own more than ten mines in South Africa, and control ten percent of shares in the South African insurance giant Sanlam. He is estimated to have a personal worth of almost 1.5 billion dollars.

The 42-year-old, who was voted South Africa’s Entrepreneur of the Year in 2002, has close ties with the country’s head of state, Thabo Mbeki. He has also been appointed President of the Chambers of Commerce and Industry South Africa (CHAMSA), the first body to unite black and white chambers of commerce in the country.

At present, Motsepe is being hailed as the saviour who will resurrect Swaziland’s dormant mining industry – while enabling the country to benefit from the process in a way that it failed to do in the past. This is a heavy mantle to bear, and one which he may be cautious of assuming.

“The skills that we have in South Africa and Swaziland are in abundance, but only a few of those people can raise enough capital to start and sustain a viable business,” he told a group of local business leaders in Mbabane recently.

Last week, Richard Maphalala, government’s Director of Geological Surveys and Mineral Sources, said he felt “positive” that Motsepe would receive the license he had requested to prospect for gold in Swaziland’s hilly northern region.

“There are occurrences of gold in the northern parts of the country, but (they) are not in big quantities,” added Maphalala. But, with gold currently trading at about 400 dollars an ounce, smaller mining operations are again showing potential for profit.

“The same (type of deposits) are exploited in Barberton (in South Africa), and they do not need large amounts of investment capital,” said Maphalala. If Motsepe succeeds in unearthing Swaziland’s remaining gold, he may also encourage local entrepreneurs to get into the business of mining.

“Swazis have only scavenged pickings left over when the big mines closed. There has been much bitterness over the way white foreigners took most of our minerals,” Andrew Mngomezulu, an elderly former miner who worked at Ngwenya Iron Ore Mine for 20 years, told IPS.

“It would be good if some mines at the end could be run by our own people. There would be a justice to that.”