Friday, 10 January 2014 16:11

Ian Farmer, Former Chief Executive, Lonmin Plc


Ian Farmer, Former Chief Executive Lonmin PLC

Mr Farmer believes that the emerging economies are still on a very strong drive. Speaking to innovaBRICS & beyond, Mr Farmer stated that emerging markets are going to play a stronger role in the global economy.

Q: How do you see the future of the BRICS countries after all the turmoil in the world economy?
I think so called emerging economies are still on a very strong drive and the next couple of decades are going to be extremely interesting from a business perspective. Youthful population where urbanisation, industrialisation and infrastructure developments are going to drive these very strongly. Business world will try and be involved and make contribution and accelerate that process in different cultures in different parts of the world and making them work is a challenge. Social issues related to those challenges should not be underestimated. But nevertheless, it is going to be an exciting world as globalisation continues to pace.

Q: Do you think in ten years time, we will be still talking about BRICS, or will it disappear?
I don't really think that is the right question to ask. I think that the so called emerging markets are going to play a stronger role in the global economy as they trade with each other. But it is more of a developing economy story, rather than the BRICS story. There are many countries outside of the BRICS definition, which are going to be just as interesting as the BRICS countries themselves.

Q: Is South Africa still an investment friendly country?
Absolutely. I think South Africa has a lot to offer. It has got a first class legal system, banking system, stock exchange,accounting system and many other attributes that are commended. It has social challenges, there is no doubt. Democracy in South Africa now is in its late teens. It has got to start to be a little bit more serious. Teething troubles are appearing.
My background is mining industry and mining industry is particularly going through some very challenging times. Mining has a huge effect on all aspects of society and therefore it acts as a sharp end of some of those challenges I have referred to. But there is no doubt it'll get through those and as once described by the senior ANC politician, the country is a bit like a cat. You can drop it from any angle but it still seems to land on its feet. I am sure it will get through these immediate trials and tribulations.

Q: Price of platinum has been going down recently. Since you are specialised in this filed, what do you think the prospects are as far as platinum is concerned?
In the short term, it is likely to remain more of the same. I think there is currently a surplus still and demand has not rebounded strongly yet. But now that the developed economies started gaining momentum, demand will gather pace. I think the under investment could start a shortage in supply and then it should start to look a lot stronger in medium term.

Q: So you think the reason for this is to do with the global economic crisis?
What you are seeing is the prices come down, demands come down and the costs of doing business in the countries go up. That squeezes profit margins and cash flow. Therefore the rate of investment in the mines has been slow. So it is very traditional and does happen. As demand starts to pick up, mines won't be able to respond automatically to that new strong demand and then there will be a shortage.