Job-cuts backlash pits mining CEOs against Zuma

Relations between South Africa’s government and the mining industry are unravelling as a commodity-price rout derails plans by President Jacob Zuma’s administration to create millions of jobs and pare a 25% jobless rate.

Mining companies in South Africa, the world’s largest platinum and manganese producer, plan to fire as many as 10 000 workers at a time when the economy is struggling to rebound from the slowest expansion since a 2009 recession.

A public slanging match has ensued between senior politicians opposed to the layoffs and executives who say their stance, together with prolonged uncertainty over mining laws and an unreliable power supply, threatens their companies’ survival. ANC secretary general Gwede Mantashe last month branded companies as “lazy” for firing staff rather than considering alternatives.

“I don’t think the government understands the gravity of the challenges in the industry,” Mzukisi Qobo, a politics lecturer at the University of Pretoria, said by phone on Wednesday. “What happens in this industry sends signals to foreign investors across a range of other sectors on how government treats big business.”

The chief executive officers of Anglo American and Sibanye Gold, the largest miner of gold in South Africa, have pushed back against the government in a rare display of public criticism by businesses.


Prices plunge
Sibanye chief executive Neal Froneman said on August 6 that mining companies are “tired of political comment instead of concrete actions”, and that the government did not understand the economic realities of running a business.

Zuma, who has pledged to create six million jobs by 2019, said in a speech on August 9 that companies must avoid retrenching “at the first possible opportunity”.

Commodity prices have plunged an almost 13-year low because of global oversupply and a slowdown in China, placing further pressure on an industry already grappling with rising labor and power costs. This year’s 17% plunge in the Bloomberg World Mining Index has wiped about $185-billion off the market value of the biggest producers. South Africa’s broadest gauge for commodity stocks has fallen 14%.

South Africa’s mining industry employs about 440 000 people and accounts for more than half of the nation’s exports. Built on the back of cheap black labour under apartheid, the industry has faced repeated criticism from unions and some politicians for seeking to entrench economic privileges whites enjoyed under minority rule.

ANC support
The ANC is under pressure to placate its labour-union allies and stem a loss of support to opposition groups such as the Economic Freedom Fighters, which has campaigned on promises to nationalise mines. Less than a year after it was created, the EFF won 6.4% support in the 2014 election to become the country’s second-largest opposition party.

“The EFF has publicly accused the government of abandoning the working class,” Dirk Kotze, a politics professor at the University of South Africa, said by phone from Pretoria. “The ANC is trying to win back lost ground.”

The government denies that its relationship with the industry is overly antagonistic.

“At times people agree with one another and at some other times they don’t really drink from the same well,” Mahlodi Muofhe, adviser to mineral resources minister Ngoako Ramatlhodi, said by phone on Wednesday. “We don’t think that translates into serious tensions.”

‘Quiet diplomacy’
Anglo American chief executive Mark Cutifani urged the government to focus on turning around ineffective state companies, such as power utility Eskom, which is disrupting operations as it curbs electricity supplies to mines.

“A government that supports uncompetitive state enterprises cannot criticize private enterprise for taking the necessary action to survive in these tough times,” Cutifani said at a presentation in Johannesburg on July 30.

Anglo American derives about 35% of its revenue from South Africa, where it controls the world’s largest platinum producer and owns Africa’s biggest iron ore asset. Both Anglo’s platinum and iron ore units are cutting jobs.

Speaking out against the government may be necessary to ensure mining companies have a future in South Africa, according to Ian Cruickshanks, chief economist of the South African Institute of Race Relations, a policy research group.

“Quiet diplomacy is not working,” he said by phone on Wednesday. “Government has simply taken it as a sign of weakness.” – 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.

Andre Janse Van
Guest Author

Related stories

Two MECs fail to understand their harmful blunders

The Western Cape’s Debbie Schäfer missed the point about racism and the North West’s Mmaphefo Matsemela undermined the dignity of a young man

Editorial: Desperately seeking an opposition

All the contenders are deeply flawed, losing support, or both

Does the Expropriation Bill muddy the land question even further?

Land ownership and its equitable distribution has floundered. Changes to a section of the constitution and the expropriation act are now before parliament, but do they offer any solution?

EFF eyes municipalities ahead of 2021 local government elections

EFF leader Julius Malema says the party is preparing to govern in many municipalities from next year. It is also launching a programme to defend the rights of farm workers

Distraction, intimidation and future alliances define events at Senekal

The lack of compassion towards Brendin Horner’s family is the failure of identity politics

Eusebius McKaiser: Reject the dichotomy of political horrors

Senekal shows us that we must make a stand against the loud voice of the populist EFF and racist rightwingers
Advertising

Subscribers only

Covid-19 surges in the Eastern Cape

With people queuing for services, no water, lax enforcement of mask rules and plenty of partying, the virus is flourishing once again, and a quarter of the growth is in the Eastern Cape

Ace prepares ANC branches for battle

ANC secretary general Ace Magashule is ignoring party policy on corruption-charged officials and taking his battle to branch level, where his ‘slate capture’ strategy is expected to leave Ramaphosa on the ropes

More top stories

Journey through anxious Joburg

A new book has collected writing about the condition of living, yes, with a high crime rate, but also other, more pervasive existential urban stresses particular to the Global South

Football legend Maradona dies

The Argentinian icon died at his home on Wednesday, two weeks after having surgery on a blood clot in his brain

Covid vaccines: Hope balanced with caution

As Covid vaccines near the manufacturing stage, a look at two polio vaccines provides valuable historical insights

Under cover of Covid, Uganda targets LGBTQ+ shelter

Pandemic rules were used to justify a violent raid on a homeless shelter in Uganda, but a group of victims is pursuing a criminal case against the perpetrators
Advertising

press releases

Loading latest Press Releases…