Canary no longer singing in South Africa’s mines

By David Smith  /  The Guardian, Johannesburg

Sun, Jun 09, 2013 - Page 14

It could be described as a canary in the coal mine — the South African government’s admission this week that it might deploy a peacekeeping force to the country’s mines is a vivid warning sign of an industry under siege.

Peacekeepers are more usually associated with warzones such as Somalia or the Democratic Republic of the Congo, but shootings at Lonmin PLC’s platinum mine in Marikana on Monday in which a union leader died underlined a creeping existential crisis.

On the same day, Glencore Xstrata PLC, the mining and commodity trading group, said it had sacked 1,000 workers across three of its chrome mines for an illegal strike last week that brought operations to a standstill.

An 18-month labor dispute across the industry — marked by a vicious union turf war — has coincided with a global decline in commodity prices to rock a sector that has shaped South Africa’s history and economy. The lowest ebb came last year, when 46 people died during protests at the Lonmin mine, including 34 shot down by police in a single day.

As the annual “strike season” gets under way, the atmosphere is febrile and there are fears of a repeat.

“If there is a need to deploy that peacekeeping force we have to do so in the mining sector as a whole,” South African Minister of Labor Mildred Oliphant said. “Because we can’t take a chance that since it has not happened here, probably it is not going to happen.”

Since the 19th century, mining has been the heartbeat of South Africa. Although the sector accounts for just 6 percent of tota economic output, it contributes 60 percent of export revenues and is the country’s biggest private employer, with more than 500,000 people, each of whom may support eight to 10 dependents. South Africa is the world’s biggest producer of platinum and the fifth-biggest producer of gold.

In February, the government sought to placate foreign investors with a “crisis? what crisis?” narrative. South African Minister of Mineral Resources Susan Shabangu said the number of mines had increased from 993 in 2004, to almost 1,600 in 2011. Associated revenue had grown from 98 billion rand (US$9.83 billion) in 2004, to 370 billion rand by the end of 2011, while employment in the industry had grown from less than 449,000 people in 2004 to more than 530,000 in June last year, she added, though it started to fall back slightly in the third quarter of last year.

Despite the robust figures, violence has roiled South Africa’s platinum belt — home to 80 percent of the world’s known reserves — as the government-allied National Union of Mineworkers (NUM) lost tens of thousands of members to the militant upstart the Association of Mineworkers and Construction Union (AMCU), which is now the dominant force.

Last month, Lonmin suffered a wildcat walkout at Marikana after a gunman shot dead an AMCU union official in a bar.

Tensions remain high, with workers opposing a plan by Anglo American Platinum Ltd to cut 6,000 jobs. With the post-apartheid consensus and bargaining structures facing collapse, AMCU head Joseph Mathunjwa has threatened to bring the economy to a standstill.

It is not just platinum. Tough wage talks are likely at the gold mines, with the NUM demanding pay rises of up to 60 percent at a time when companies are struggling with shrinking margins.

With the country’s economic growth forecast at less than 3 percent this year, South African President Jacob Zuma called a snap press conference last week in an attempt to allay concerns and assign his deputy to broker a truce between the two unions, but it did not prevent the rand plummeting to a four-year low against the US dollar.

Alarm bells are ringing and there is a sense that the old model is broken.

“The industry is obviously not in good shape and I hope these recent events galvanize people into action, said Peter Leon, the head of Africa mining and energy projects at law firm Webber Wentzel. “You can’t just have President Zuma making a statement and hope the problems will go away. The problems are deep-seated and need to be addressed.”

Leon said South Africa’s black economic empowerment policies had failed to give workers a stake in the mines, with only a few companies setting an example by encouraging a sense of shared ownership with financial rewards.

Zuma and the governing African National Congress party have been widely criticized for their slow response to Marikana and for favoring the NUM at AMCU’s expense.

However, Bobby Godsell, former chief executive of AngloGold Ashanti Ltd and the South African Chamber of Mines, said: “I don’t believe it’s helpful or particularly accurate to point fingers at government. What we’ve seen worldwide, for example in Australia, is a pressure on commodity prices as people believe they see the rate of Chinese growth slowing.”

Godsell praised the government for prioritizing and nurturing mining over the past decade, in contrast to the first 10 years after apartheid when it was seen as “yesterday’s industry.”

This is not the first crisis, he added. The gold sector was in dire trouble in the 1980s — also a time of deep political turmoil in South Africa — but still managed to bounce back.

Yet 19 years after the end of white minority rule, workers’ frustrations and expectations are higher than ever. The typical South African mineworker has eight dependents, many of whom live far from the shafts in remote rural areas. Despite above-inflation pay increases in recent years, the worst-paid still only make about 4,000 rand a month.

Today’s malaise is a manifestation of historical problems that have never been solved.

“People forget that the mining industry is 140 to 150 years old and its foundation was migrant labor and cheap labor. This model has not changed,” leading political economist Moeletsi Mbeki said.

The brutality of colonialism and apartheid are no longer viable, he added.

“You can’t sustain the use of force that has been the character of the mining industry. The workers themselves are now voters and much more politically savvy,” Mbeki said.