Power back in South Africa; but what new power to the powerful?

The good news is that South African mines should be back on line when Escom resumes power supply.   The amazing news is  that the shortages occurred in the first place.  Here is a piece from a friend in South Africa who knows more about what is going on than I do: 

Namibia [mining] is doing surprisingly well given Africa’s track record.  Way better overall than South Africa which, in spite of its wealth, is now short of power.  It seems the politicians decided that a white paper presented to parliament 10 years ago requesting funds for the Eskom parasital to build more power stations was nothing more than a White supremacy plot and tossed the white paper into the can (probably they didn’t understand what a “white peper” really is.  Now Eskom has had to tell the gold mines and the platinum mines to shut down for two weeks to save power while they nurse some of the old powerstations back to service.  The mines have no power - no work no pay agreements with the unions so the mine workers are not getting wages during this period.  The chickens are coming home to roost.  I am told that the new ANC leader, Jacob Zuma, who is as corrupt as the best of them in Africa but who is a more hard line black nationalist than the incumbent, is just waiting to get his hands on the country’s parliament so he can implement more Mugabe-like actions, and that there is talk by the government of dismantling the Skorpions - an FBI copy that has been hunting down corrupt politicians.  It was set up by the ANC government but obviously no one told the Skorpion leadership that they are only to investigate non-ANC corruption.  Now it is all getting too hot for the ANC leaders…  The press are having a field day with all of this; so now there is also talk of muzzling the press.

This is incredibly sad.  But leaving aside the emotions, it is fair early warning to investors in mines in South Africa that they should be most cautious.  I suspect there is still some time left to make money investing in South African mining, but you would do well to keep a sharp eye on infrastructure and political developments and be ready to sell and go elsewhere with your investments as these dire predictions prove true. 

This is another case of political risk.  Not the type that results in outright expropriation of mining property, but the type that is creeping government incompetence, creeping infrastructure decay and failure, and creeping lower financial yield. 

One wonders why it is so common a feature of the African landscape.  My own theory is that it represents the curse of tribalism.  Not the culture part, but the interbreeding and extended family formation that puts group and nepotistic solidarity above the rights and benefits of the nation.  We are not likely any time soon to see the extended family fade away; hence we will long have to consider the social and family norms that are common in Africa and that make mining investment in Africa an activity best left to others with less sensitive morals than ours. 

Which enables us to formulate another Investment Rule No 15:  If the power runs short or the powerful run wild, sell.