Pay rises hollow victory for dwindling SA miners

Gilbert Mosala shuffles across the deserted parking lot of Buffelsfontein Gold Mine in central South Africa, home to the world's largest gold reserves. In the past year, almost 95% of his 2 500 colleagues were fired.

"I was one of the lucky guys," Mosala, who estimates his age at about 51 or 52, said in Fanagalo, a pidgin language frequently used in South African mines. Not only does Mosala still have a job, he, along with 107 000 other miners, won an 8% pay increase last month after the National Union of Mineworkers (NUM) led workers on a 48-hour strike.

"The increase is good, but I don't like to strike because then more people may lose jobs," Mosala, wearing blue overalls, a ripped green sweater and a fluorescent yellow vest, said during a break from his task of sifting through leftover ore.

Gold miners have gone from being among the most exploited of workers under apartheid, the racial segregationist policy that gave black South Africans inferior educations and dispossessed them of land, to being better paid than the average employee in the country.

Rising wages have been accompanied by personnel cuts, which amounted to 6 624 this year, about 5% of employment in the gold industry, according to Statistics South Africa. Total gold-mine employment is now less than a third of its level when the industry was at a peak of 480 000 workers in 1988.

South African gold mining companies such as AngloGold Ashanti, Africa's largest producer of the metal, are battling to contain costs that have almost tripled since 2007 as they dig deeper for the ore, wage demands exceed inflation and energy prices soar.

Mine end
The Buffelsfontein mine's owner, Village Main Reef, shut it down in August after almost 60 years in operation after costs per ounce of the metal spiraled to 50% more than the gold price. Underground work has ceased and Mosala and the other 148 miners left at the shaft are doing essential tasks to keep the mine safe. They declined to join the strike.

"Buffels has come to the end of its life; it has been mined for almost 60 years," Village Main's chief executive officer Ferdi Dippenaar. "The gold left is low grade and deep." As for the pay increase, "We had a range and the 8% was at the top end. Let's say we gave 1% more than we would've liked."

A bedrock of the South African economy since the discovery of the metal in 1886 in Witwatersrand, near what became Johannesburg, gold mining spawned some of the world's biggest companies, such as Anglo American. It transformed South Africa from a farming economy into the continent's largest. And the industry provided opportunities for unskilled black males, who were restricted from certain jobs because of their race.

Apartheid fight
With the ANC banned as an organisation during white minority rule, unions were at the forefront of the fight against segregationist policies, pushing for living wages for the millions of black workers confined to menial jobs.

In 1974, eight years before Cyril Ramaphosa, now deputy president of the ruling ANC, formed the NUM, gold miners earned a monthly wage of about R41, the equivalent of $60 at the time. That was 15% lower than average household disposable income, which excludes taxes, according to data from the central bank.

Since reaching a peak of 1 000 metric tonnes in 1970, annual gold production has steadily fallen. The decline has accelerated in the past five years, with South Africa now the sixth-biggest producer behind China, Australia, the US, Russia and Peru. It had been number one in the world for more than 100 years, according to the Chamber of Mines. Output was 167-tonnes in 2012, or 6% of global output, versus 79% in 1970.

Rising earnings
A slump in employment of almost a fifth since 2007 has been accompanied by a 78% surge in annual earnings per worker in the industry to R155 037 ($15,492) last year, according to data from the Johannesburg-based chamber. That compares with a 17% increase, to R119 542, for average household income in South Africa over the five years through 2011, according to the government's statistics agency.

"Falling grades, rising electricity prices, labour costs, falling productivity, those are all structural issues that are not going to change," said Michael Schroder, a Johannesburg- based fund manager at Old Mutual Equities who helps manage the equivalent of $4.1-billion of assets. "Interpolating the rate of how South African gold production has fallen, there won't be much left in 10 years' time."

South Africa's remaining gold resources are located deep underground, requiring some mines to reach as low as 3.9 kilometres below the surface. Temperatures can climb to as high as 60 degrees Celsius and humidity is close to 100%.

That's contributed to rising costs, which averaged $1 000 an ounce at South Africa's three largest gold producers in the first six months of the year, according to data compiled by Bloomberg. Toronto-based Barrick Gold, which is the world's biggest miner and doesn't have operations in South Africa, spent $558 an ounce in the period.

A gold bear market is leaving employers exposed. Gold prices are heading for the biggest annual drop in 16 years, plunging 21% since the beginning of the year to $1 323.23 an ounce in Monday as of 5:10pm New York time. An improving US economy and speculation that the Federal Reserve will curb its accommodative monetary policy has pared bullion's appeal as a store of value.

Pay increases at companies should be linked to improved productivity to ensure the industry survives, according to South African Deputy President Kgalema Motlanthe.

'Killing the Goose'
"What's the point of killing the goose that lays the golden egg?" Motlanthe asked in an interview in London on September 17. "You wouldn't want to smother these companies out of existence. It defeats the purpose."

Labour disputes in the country's mining industry have sometimes turned violent. Clashes between rival labour unions at Lonmin's Marikana platinum mine in August last year sparked the worst violence in the mining industry since the end of apartheid. At least 44 people were killed, including 34 miners who died after police opened fire on a group of striking workers on August 16.

Workers can't be blamed for the fate of the industry, which is in decline despite higher wage demands, said Lesiba Seshoka, a spokesperson for Johannesburg-based NUM.

"Don't tell us the economy will collapse if poor workers get a R400 increase," Seshoka said. "If it does collapse it's for the better because we're not benefiting anyway."

Mosala, who sends three quarters of his salary home to his 38-year-old wife and two children about 370 kilometers away in the Northern Cape province, says he hopes he'll be one of the miners picked to maintain the mine for a few more years.

If not, he has limited options. He's due a severance package of at least one week's wages for every year worked at the mine since 2005, when a previous owner liquidated the assets. Workers can also claim a portion of their monthly salaries from the government's unemployment insurance fund for a maximum of about eight months.

"The mine is going to close and there will be nothing else for us," Mosala said. "There is nothing. It’s going to be very difficult." – Bloomberg

Subscribe to the M&G

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years, and we’ve survived right from day one thanks to the support of readers who value fiercely independent journalism that is beholden to no-one. To help us continue for another 35 future years with the same proud values, please consider taking out a subscription.

Related stories

Fix economy: Cut, build, tax

Expert panel presents a range of solutions to the economic crisis that include cost cutting, infrastructure spending and a solidarity levy

ANC’s rogue deployees revealed

Despite 6 300 ANC cadres working in government, the party’s integrity committee has done little to deal with its accused members

Watch it again: Ramaphosa details economic recovery plan

According to the Presidency, the plan aims to expedite, in a sustainable manner, the recovery of South Africa’s economy

Ramaphosa reiterates support for emerging farmers

On the back of the announcement that the government would allocate more land to be leased by emerging farmers, President Cyril Ramaphosa says that beneficiaries will also be trained in financial management and enterprise development

Citizens tired of being played for a fool

The use of a South African Air Force jet by ANC officials without the minister following the required procedures is one such case — and more questions arise on examination of that case

Infrastructure key to economic recovery — Ramaphosa

The governing party wants localisation at the centre of its infrastructure-led strategy

Subscribers only

SAA bailout raises more questions

As the government continues to grapple with the troubles facing the airline, it would do well to keep on eye on the impending Denel implosion

ANC’s rogue deployees revealed

Despite 6 300 ANC cadres working in government, the party’s integrity committee has done little to deal with its accused members

More top stories

Hawks swoop down with more arrests in R1.4-billion corruption blitz

The spate of arrests for corruption continues apace in Gauteng and the Eastern Cape.

Catholic NGO boss accused of racism and abuse in Sudan

The aid worker allegedly called his security guard a ‘slave’

Agrizzi too ill to be treated at Bara?

The alleged crook’s “health emergency” — if that is what it is — shows up the flaws, either in our health system or in our leadership as a whole

SANDF hid R200m expenditure on ‘Covid’ drug it can’t use

Military health officials are puzzled by the defence department importing a drug that has not been approved for treating coronavirus symptoms from Cuba

press releases

Loading latest Press Releases…

The best local and international journalism

handpicked and in your inbox every weekday