It’s a case of a glass half full or half empty

In some important respects, the latest Mining Charter debate is comparable to the furore around the decision by former SABC chief operating officer Hlaudi Motsoeneng that 90% of all music played by SABC radio stations was to be local.

It’s not an instinctive comparison, but when you think about it, the similarities are striking.

Of all the weird and wonderful decisions that Motsoeneng made, the 90% decision was perhaps the only one that was genuinely and broadly popular. That, in itself, should sound the alarm.

Musicians around the country liked the idea, obviously, because it was directed at them, and I suspect people in general felt, why not? Give the local artists a chance.

Everyone who was against the idea was automatically classified as being against local music, because in SA, arguing something that is just common sense is often regarded as an act of retrograde insolence.

Yet Motsoeneng’s action was a disaster.

Advertisers worried that listenership would decline, which it did, and put their advertising on hold.

Radio Lotus, which is totally dependent on the fabulous stock of imported Indian music, was unable to find local bands – they simply don’t exist – to fill its roster.

So, ironically, Motsoeneng’s most popular decision had to be overturned and, despite this last-gasp attempt at finding a populist constituency, he lost his job.

So why, specifically, did it all go wrong? At root, the problem, I think, is a matter of a balanced perspective.

Motsoeneng understood the issue of promoting the local music business only from the perspective of local musicians.

In the process, he ignored the financial effect on his organisation and more broadly, the health of the industry overall.

But, most importantly, he ignored his consumers, who, as it happens, really like to listen to great music wherever it’s created.

Take global superstars like Beyoncé and Drake out of the equation and suddenly you have a much less desirable consumer experience and a smaller local industry.

Even though Motsoeneng thought he was doing local musicians a favour, the overall result, I would guess, is that they would have ended up with 90% of an industry a third of the size.

As strange as it may seem, they would have been better off with 30% of an industry three times the size. Such are the perils of good intentions.

And you can take the analogy further.

Those customers who left the SABC discovered different ways to access Beyoncé and Drake, through Apple Music, for example, or through podcasts. Once they make that switch, they aren’t coming back.

Compare all this to the newly tabled Mining Charter.

People who oppose the charter, like the industry, are accused of being “anti-transformation” and a host of other epithets designed to capture an emotional response.

But what if they are just trying to apply common sense to a difficult situation?

Mining companies around the world are fantastically aware of all kinds of local imperatives: social, environmental and community issues.

The mining industry transformation efforts have gone much further than any other sector here and abroad. To accuse them of being “antitransformation” is really a statement of ignorance.

Would they prefer to dispense with contributing to all the social requirements? Of course, but as a matter of fact, they haven’t and can’t – not here and not anywhere else in the world.

The charter is obviously written with one overriding concern: transformation.

The complexity of the issues and the dimensions of the problem are ignored. And the dangers are huge.

In the first quarter of 2017, not a single gold mine was profitable. Some of that has to do with seasonal issues, but the problem is that costs have exploded, like electricity and labour, which are 60% of expenditure.

One good example of unintended consequences is that the charter, to the extent that it is explicable, suggests that if a black empowerment company’s investment ends up under the water, the mining company must make up the shortfall.

This is arguably a Radio Lotus situation, because the result is that it will kill vendor financing since no sensible mining company will sign a deal in which the counterparty has an incentive to fail.

Ironically, the mining ministry is trying to anticipate the situation that will arise from its own destruction of the industry by protecting its notional constituency from the very downturn it is creating.

And just like the Apple iTunes option, the global mining industry has found alternatives.

It’s been said often before, but the South African mining industry has halved over the past two decades, while the Australian industry has tripled and the Brazilian industry more than doubled.

Obviously, we would all like a transformed mining industry, but achieving that consists of more dimensions that simply legislating the wishes of the empowerment players.

What lies behind this charter when you strip away the good intentions is a kind of vicious circle created by the declining fortunes of the ANC.

Having selected an unpopular president and implemented economically dispiriting policies, the ANC is now in a corner.

Its response is to double down on those economically dispiriting policies in a frenzy of measures it thinks will reverse those fortunes.

But the more it imposes policies it assumes are popular, the more the economy declines. The more the economy declines, the more its popularity is threatened.

We are not Zimbabwe. But we are not not Zimbabwe either.

Tim Cohen is the editor of Business Day.