'Miner Spring' may lead to more unrest

Fuelled by outrage over the police killing of 34 striking miners last month, the militancy in the world's top platinum producer is leading to closed shafts and job losses. (Pictures: Delwyn Verasamy, M&G)

Fuelled by outrage over the police killing of 34 striking miners last month, the militancy in the world's top platinum producer is leading to closed shafts and job losses. (Pictures: Delwyn Verasamy, M&G)

Fuelled by outrage over the police killing of 34 striking miners last month, the militancy in the world's top platinum producer is leading to closed shafts and job losses, triggering in turn more union and social tension.

"This may be the beginning of a 'Miner Spring'. Perhaps we have reached a point now where the inequity in the pay scale would lead to broader civil disobedience and protest action," said Tony Healy, an expert on South African labour law.

The worker stridency has found fertile soil in the squalor of the poor communities that ring the mines in South Africa, the continent's wealthiest economy – but one scarred by the inequalities of its racist past.

It is also the most serious challenge since the end of white rule in 1994 to the unwritten pact at the heart of post-apartheid political and economic power: unions aligned to the ruling ANC deliver modestly higher wages for workers, while also ensuring labour stability for big business.

Operations have been frozen for almost a month at world No. 3 platinum producer Lonmin after violence erupted with the killing of mine security guards and two police officers.
The mass shooting by police followed days later.

Although the most violent, it was just one in a string of incidents caused by a turf war in the platinum belt between the dominant National Union of Mineworkers (NUM) and the militant Association of Mineworkers and Construction Union (Amcu).

Aquarius Platinum shut its Everest mine in June, citing labour infighting, with the loss of 2 000 jobs. Lonmin has warned if its strike is prolonged, 40 000 jobs will be lost.

Worker anger
But worker anger at NUM is rife, with its leaders seen as too close to management and the ANC, its senior partner in an official governing alliance.

At Marikana on Wednesday, demonstrating miners chanted "We hate Zokwana" – a reference to NUM president Senzeni Zokwana.

The discontent has enabled Amcu to recruit thousands of disenchanted NUM members at Lonmin, Impala Platinum and Aquarius Platinum. They are also active at Anglo American Platinum, the world's biggest producer, although have not had as big an impact.

In response, NUM has signalled it is prepared to push its own wage demands harder, by insisting that negotiations on two-year collective agreements in the gold and coal sectors start several months early.

"We are strongly of the view that we need to arrest the dissatisfaction that members have over their wages and start talking sooner rather than later. Maybe as early as February next year," spokesperson Lesiba Seshoka said.

NUM members have been getting pay rises above inflation but at the bottom of the pay scale that does not go far as most mineworkers have on average eight dependents.

The anti-NUM contagion has now infected the gold sector, with 12 000 workers at Gold Fields, a quarter of its workforce, downing tools last week because of anger with their local NUM leaders, whom they want replaced.

Shielded from militancy
Gold was supposed to be immune, in part because much of its workforce lives on hostels on private mine property. In the platinum sector most workers live off-site in communities around the mines where union recruiters can work freely.

But the Gold Fields' wildcat strike, which ended on Wednesday, did not need outside agitators. The workers in the hostels became fed up with their NUM branch and insisted they step down.

Gold was also seen as shielded from militancy by the industry-wide, collective bargaining process that defines wage talks among the big producers. Platinum has a company-by-company process that has provided a gap for upstart unions to muscle in pit by pit and claim they can strike better deals.

But if NUM wants to bring wage talks forward, this framework may start to fall apart.

The battle cry at Lonmin, which began with 3 000 rock drill operators who launched the illegal strike, has been for a basic wage of R12 500 a month, well over double the R5 400 they currently receive.

If Lonmin concedes, it will add about $30-million a year to its wage bill against a first-half profit of $18-million.

But the demand has spread from rock drill operators to thousands of less-skilled workers who also want R12 500 as a minimum monthly wage.

Lonmin already has a shaky balance sheet and is widely expected to offer a rights issue to shore it up. Much of the platinum sector is already underwater with shafts seen closing because of depressed costs and soaring prices.

Cost of gold
Gold companies look on firmer ground, in large part because of high bullion prices, but they too are getting squeezed and the sun may be setting on South Africa's 120-year-old gold industry.

Take Gold Fields, the world's fourth largest bullion producer that gets about half of its production from South Africa. Its total cash costs per ounce in South Africa have risen from $618 in 2007 to $1 360 last year.

The average gold price over the same period has risen to $1 569 an ounce from $659 but there is no guarantee the bull run will be maintained.

Global mine inflation, the cost of running a mine, is about 15% per year but has been higher in South Africa. Power costs have soared and NUM has consistently delivered above-inflation wage hikes for its members, usually 10% or more.

Adding just 15% a year to Gold Fields' costs would mean it would need a gold price of over $2 000 an ounce by 2014 just to break even in South Africa.

In a research note, SBG Securities forecast downsizing at almost all South Africa's mature gold operations over the next three years in the face of "declining reserves and unrelenting inflationary pressures".

The gold sector underwent a painful restructuring over a decade ago when the price of bullion slumped, leading to tens of thousands of job losses and South Africa's fall from world number one gold producer to fourth place.

Job losses in the mining sector have already added to South Africa's social ills, inequalities and poverty levels, but the next round looks set to come at a time of hardened union militancy which will stoke tensions higher. – Reuters

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