Richards Bay economy on brink of collapse as RBM closes?

While some were saying this week that the Constitutional Court’s sentencing of Jacob Zuma was a triumph for the rule of law, which would encourage investors; a major global mining company was shutting down one of its local operations because of criminal anarchy.

Mining and resources giant Rio Tinto closed its Richards Bay Minerals operation in KwaZulu-Natal following ongoing violence, in which a senior executive was assassinated and millions of rands worth of equipment was destroyed.

In a statement issued in London, Rio Tinto chief executive, minerals, Sinead Kaufman, said: “The safety of our people is our top priority.

“We continue to offer our full support to the investigating authorities and I would like to acknowledge the ongoing support of the regional and national governments and South African Police Service as we work together to ensure that we can safely resume operations.”

The Rio Tinto move comes in the wake of the decision by dairy company Clover to close its operation in Lichtenburg in the North West because of a collapse of services in that town.

Taken together, the two events paint a shockingly awful picture of doing business in present-day South Africa.

If it is not incompetence and corruption on the part of the government (at all levels), then it is violence which seldom gets dealt with effectively by the police.

On top of that, there is the issue of what will happen when the process of expropriation without compensation actually becomes law and is executed.

While it is true that the benefits of “direct foreign investment” can often be illusory in third world countries (which is what we are), South Africa is not doing itself any favours.

There are plenty of other safe destinations for foreign money – they will get the jobs and the tax money, we won’t.