One day in the future, the astonishing and very tragic story of how
a government destroyed this country’s
mining industry will be analysed to provide cases studies and research topics
for students yet unborn. The fine details of whether it was by deliberate
design and malevolent intervention or by incompetence and a failure to
understand the business will be argued for years. However, in the present we
are witnesses to wealth and community destruction on an unprecedented scale interleaved
with shocking and disastrous human suffering. The state and its agents have in
just a few days been responsible for many more deaths than any alleged mining management
indifference has caused over far longer periods. And the whole sorry mess is now
being used as a backdrop for cynical and vicious electioneering. The
hypocritical but amusing sight of super luxury cars carrying painted messages
celebrating the ruling party’s “100 years of selfless struggle” is now deeply
distasteful. Ordering that flags be lowered to half-mast for a week simply
exemplifies the unwillingness or even incapacity of the national leaders to respond
appropriately to the severity of the situation.
Here in Durban
we are being treated to the sight of the municipal police force so frustrated
with a lack of management response to their grievances that the lawmen
themselves have become lawless. The city fathers have done nothing but splutter
that they know who is responsible and if they don’t stop it immediately then
there will be trouble. Wow. Now that’s a serious threat. Understandably even
the national police are reluctant to confront their armed fellow
“peace-officers”.
Even if there are financial
and economic consequences from these social and political events only the currency market has shown a
weakness while the All Share index made another assault on the 36 000 level. Companies with June half-year ends are now
reporting and relatively few are announcing shocking numbers. The exceptions
with big hits to earnings of course include miners like Billiton
and Impala with Basil Read – a construction company – still finding life very
hard. Gratifyingly it seems that some companies are adjusting dividend payments
upwards in response to the abolition of the 10% Secondary Tax on Companies.
This in part mitigates the effect of the new 15% Withholding Tax on dividends payable
by shareholders. Nevertheless there are no compelling or obvious value
situations and the main reason for investment remains choosing an alternative
to cash. The variable dividend preference shares are back on the radar screens
for the especially risk averse. The unexpected and unfathomable fall in
consumer inflation was insufficient to cool my interest in the index linked
bond ETF.
The national broadcaster’s call for tenders for someone to come and
restructure and optimise their balance sheet is both puzzling and worrying.
There can be little doubt that the business is insolvent with liabilities way
exceeding assets and any rejigging of the numbers to prove otherwise would
surely be both illegal and misleading. The state as the sole shareholder in
that enterprise seems content to pour taxpayer’s money into the abyss in return
for having access to the eyes and ears of the public. It will be interesting to
see who submits tenders and on what basis the winner will be selected. Sadly we
shall probably never know.
For a short but terrifying moment it looked as if the Proteas had
lost their way at Lords last weekend. But now we are number one test playing
nation and about time too. Matters are far less certain in the rugby camp,
however, with the ‘bokke conceding turnover to the Pumas far too often.
Tomorrow night’s return match is very concerning. And the injured Lions don’t
seem to be as dangerous as forecast.
James Greener
24th August 2012
