by Bruce Jackson, Senior Engagement Manager at GES
Reading the current news reports from afar, there seems to be growing unrest in the Platinum Belt of South Africa, an area that accounts for some 80 per cent of the world’s known reserves of platinum group metals and includes the big three platinum mining companies: Lonmin, Impala Platinum (Implats) and Anglo American Platinum.
Earlier in the year, the Department of Mining Resources (DMR) took the industry by surprise with the launch of Mining Charter 3, imposed by a newly appointed Mining Minister without any consultation. It caused company and investor concern, particularly due to the proposed increase in the required percentage ownership by Historically Disadvantaged South Africans. The Charter came into force in June 2017, only to be suspended a month later, amid a flurry of court activity brought by the industry’s Chamber of Mines.
More worrying is the economic situation within South Africa’s platinum miners. The demand for platinum, whose main market is the manufacture of catalytic converters for diesel cars, is still low; a direct consequence of Volkswagen’s “dieselgate”, which has hit sales of new diesel cars worldwide. The lower demand for platinum has been reflected in the price, with the price of platinum surpassed by palladium in September 2017 for the first time since 2001. But the concern for the miners is whether there is a sustainable long-term market for platinum.
We can use Lonmin as an example of a company that is adapting to the new reality. The company has made significant operational improvements by closing high-cost, low-return shafts and investing in, or acquiring, new shafts and reserves; and has reduced production costs by almost 30 per cent in the last three years.
There has also been a human cost. Lonmin has been criticised for failing to invest in its social licence to operate. And there have been redundancies: in May 2015, the workforce numbered 37,000 full-time and contract workers; it is now approximately 25,000. The losses have been achieved peacefully, with the cooperation of the representative union, the Association of Mineworkers and Construction Union (AMCU). Now, in October 2017, another 1,200 are scheduled for redundancy by Christmas. Overall, South Africa’s mines may lose an estimated 23,000 jobs in 2017.
There is a worrying repetition of history, with similarities between 2012 and today. In May 2017, community unrest that arose from frustration at the lack of job opportunities boiled over and resulted in rioting and interrupted power supplies to some mines.
Union officials are being murdered; at least five AMCU officials associated with either Implats or Lonmin were killed in September 2017. Do the incidents reflect similar union tensions as those leading up to the unofficial strike that resulted in the events of August 2012?
In 2012, AMCU, which was the voice of the disaffected mineworkers, overthrew the National Union of Mineworkers as the representative union within the platinum belt. AMCU is now being challenged by Solidarity, which is leading the challenge to the recently announced redundancies at Lonmin.
There are numerous differences between 2012 and now, though. In 2016, the platinum miners peacefully negotiated a three-year wage deal; many miners are still in debt from the prolonged strike in 2014. In addition, the workers can see that platinum mining is an industry fighting for its survival and looking for new markets.
Relationships between union and company are far better and the more the industry struggles, the closer the employees, employers, and unions will work to meet the challenge and survive. In spite of the May 2017 disturbances, communities are joining the struggle, as recent news indicates that about 150 community-based organisations and activists, represented by the Centre for Applied Legal Studies, will apply to join the existing legal action brought by the mining companies against the DMR’s Mining Charter 3. They state that the communities should also be included in any future consultations on a new charter. It would appear that hard economic realities and political ineptitude have managed to unite communities and companies in a common cause.