POLITICAL ECONOMY

South Africa's gold and platinum miners - between a rock and a hard place

Wage demands and labour unrest fuelled by inter-union rivalries and maverick politicians like Julius Malema are putting South Africa's gold and platinum mines in jeopardy.

LONDON (Mineweb) - 

It can't be a comfortable place to be - running a South African centred gold or platinum mining company at the present time. Serious labour disputes, which can boil over into violent confrontations, when one has workforces the size of those on most of the significant mining operations, has to be very worrying for top management, particularly when a high profile, charismatic, supposedly sidelined politician like Julius Malema - who has long called for mine nationalisation - starts getting involved. Indeed, the Malema factor may prove to be the most disturbing development of all unless the ruling African National Congress (ANC) party can somehow bring him to heel.

On this subject reports surfaced in the South African press yesterday of an arrest warrant being issued for Malema on corruption charges and of an investigation for tax evasion.  Perhaps a recipe for making a martyr out of a maverick whatever the truth of the allegations!

Supposedly the violence which afflicted the Marikana platinum mine with its more than 20,000 employees, and which led to the deaths of over 40 people, was drummed up through inter-union rivalries with a new union the AMCU, trying to muscle in on the established NUM which it saw as part of the ANC establishment and claimed was not fully representing the miners' aspirations.  With historic tribal antipathies which could be stirred up by agitators, the scene was ripe for the kind of confrontations which took place at Marikana and has created similar rumblings at other platinum mining operations - and now is spreading to the gold mines too with disruptions at Gold Fields big KDC operation and trouble at the much smaller Gold One Modder East mine.  Given that the bigger gold and platinum mines draw their huge labour forces, not necessarily from the local communities, but from across South Africa and from neighbouring countries too, the scene could be ripe for a spread of the factors which surfaced at Marikana.  The Marikana mine remains at a virtual standstill almost 3 weeks after the main shooting incident with most miners staying away - but whether this is through intimidation is not known.

The Marikana conflict appears to have arisen through a key group of mineworkers, the rock drill operators, supposedly feeling shortchanged by NUM-negotiated across-the-board pay deals - a conflict which could be duplicated at virtually any platinum or gold mining operation in the country.  There may well also be a host of other grievances which have helped fan the flames of dissent.

Now enter Malema.  The former ANC Youth League leader has already built up a popular following.  He initially made himself unpopular with the ANC hierarchy through his constant call for nationalisation of the gold mines.  He was subsequently expelled from the ANC, officially for bringing the party into disrepute and sowing division within it, but has also come up with some divisive anti-white rhetoric in some of his speeches which is contrary to the ANC's official line in this supposedly multi-cultural, multiracial, country.

Now he appears to be calling for at least a doubling of the lowest wages in the mining industry to ZAR12,500 a month (around US$1560/a month which may seem ridiculously low by Western standards, but is actually fairly high by most developing world standards) and which is probably a level the already struggling mining companies cannot afford, particularly given the size of their workforces. 

Malema seems to have chosen mineworkers as his new constituency and has popped up at any existing and potential troublespots.  Recently he is reported to have called for miners countrywide to make all mines "ungovernable" and to carry on with, and increase, strike action.

There could even be a hidden agenda here for Malema.  If the mining companies are forced to raise wages by this kind of amount the only way they can accommodate this additional cost is by cutting the size of their workforces through increased mechanisation, and/or just improving productivity overall by axing some less necessary functions altogether.  With South African unemployment running at enormous levels, in effect any major workforce cuts could be playing into the hands of the pro-nationalisation lobby and Malema in particular.  But this takes no account of the almost inevitable consequence of such mine nationalisation - loss-making mining operations supporting oversized workforces while at the same time killing off virtually any chance of increased foreign investment in the country's mining sector.

The country's key coal (coal is currently South Africa's most valuable mine export commodity overtaking gold and platinum) and iron ore mines, though, are likely to be less affected by the troubles at the platinum and gold operations given the differences in mining methods and workforce sizes.

Some politicians opposed to SA's President Zuma too will be covertly supporting Malema while paying lip service to condemning his actions.  Anything seen as weakening Zuma's position can play into the hands of his opponents with the country's Presidency effectively up for renewal later this year.

This mine conflict, with its political overtones, will not go away quickly - with or without Malema.  It looks to have gained sufficient momentum to spread - and run and run.