• Mines minister became a member of parliament this month
  • Sensitive gold sector wage talks had made good progress

South African President Jacob Zuma’s decision to appoint a new mines minister with no experience in the industry or national politics may destabilize critical wage talks at gold mines, analysts said.

The new minister, Mosebenzi Zwane, is a lawmaker whose previous political apex was in the government of the rural Free State province. He became a member of parliament this month. National newspapers including the Mail & Guardian and Business Day also allege Zwane is connected to the Gupta family, personal friends of Zuma with business interests in South Africa including computer systems and a uranium mine.

"You need a really intelligent, experienced, strong and honest guy in there
who carries his weight in the upper echelons," Peter Major, a mining analyst at Cadiz Specialized Asset Management in Cape Town, said Friday in a phone interview. "This isn’t it. The odds are against him."

Zwane’s appointment on Tuesday comes at a time when the mining industry in the world’s biggest platinum and manganese producer is in decline. Hit by low commodity prices and increasing wage demands, it was the second-worst performing industry in the second quarter, when the gross domestic product shrank an annualized 1.3 percent. Mining also accounts for more than half of South Africa’s exports and employs about 446,000 people.

‘Fair Chance’

"We hope that we can hit the ground running because we had momentum," Gideon du Plessis, general secretary of the Solidarity workers union, said about Zwane in a phone interview. "We need to give him a fair chance."

Thibedi Ramontja, director general at the Department of Mineral Resources, didn’t immediately return e-mails seeking comment. Zuma’s spokesman, Bongani Majola, said he may comment later. Gupta family spokesman Gary Naidoo was not immediately available to comment.

The outgoing minister, Ngoako Ramatlhodi, had made good progress during three months of mediation in sensitive wage talks between labor unions and gold companies, Hurbey Geldenhuys, a mining analystat Vunani Securities, said by phone.

"The decision to change the minister when you’ve got wage negotiations at the gold mines and when you’ve got commodity prices quite low, that is not good," Geldenhuys said. "It could be disruptive. There was good progress by the previous minister and it would be a pity if that momentum were to be lost."

Airport Controversy

Opposition parties and newspapers joined the chorus of criticism, alleging that Zwane helped the Gupta family gain approval to land their private plane at a military air base in 2013 by writing a letter inviting wedding guests and suggesting they were coming to South Africa on government business.

The Guptas issued a public apology after an Airbus carrying guests for the wedding of one of their relatives in South Africa landed at the Waterkloof Air Force base near Pretoria, the capital. Zuma denied authorizing the landing and blamed lower-level officials.

"It is important to note that Zwane is allegedly close to the Gupta family, well-known financial backers of Zuma and the African National Congress," Eurasia analyst Mark Rosenberg said in an e-mailed note, referring to the ruling ANC party.

The Economic Freedom Fighters, South Africa’s second-biggest opposition party, said that "strong links to the Guptas" are necessary to gain a seat in Zuma’s cabinet.

"The pity is that we didn’t know him at all," Du Plessis said. "All the things that we heard up until now were controversial."

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