CHALLENGES TO SOUTH AFRICA’S MINING SECTOR

(Previously reported in The Inkerman Group’s blog)

The South African mining sector has been plagued by often deadly demonstrations and incidents of unofficial industrial action in recent months. The unfolding events have left many international investors concerned; some have even considered ‘pulling the plug’ on their South African operations, whilst others have resorted to mass layoffs in order to put a stop to the ‘wildcat’ strikes. Most recently, Anglo American Platinum (Amplats) became the focal point for the latest round of violent protests. On 11 October 2012, following more than three weeks of unauthorised strikes by 28,000 workers in Rustenburg (12,000 of who were later fired); clashes erupted at the informal settlement in Photsaneng. According to local police, two individuals were killed, including one Amplats employee, when approximately 400 people gathered at the site and attempted to prevent people from returning to work.

Amplats is the latest company to fall victim to widespread unauthorised strike action. As previously reported by The Inkerman Group, on 11 August 2012, deadly clashes between unions and police officers erupted at the London-based Lonmin mining company’s Western Platinum site in South Africa. The clashes emerged after a struggle for membership between the powerful, government-allied National Union of Mineworkers (NUM), and the upstart Association of Mineworkers and Construction Union (AMCU), turned violent. According to reports, AMCU was trying to encourage current members of NUM to leave the organisation by promising the union workers “large pay increases”. This created anger among the rival unions, which ultimately led to the death of seven Lonmin employees, as well as two police officers.  On 16 August 2012, in a move which further alienated the striking employees from the South African Government, national police officers resorted to heavy-handed tactics to stop the protest, killing thirty-four demonstrations in what has been labelled the “deadliest security incident” since the end of the country’s shameful apartheid era. Industrial action directed at mining firms did not rest there. The fourth largest gold mining company, Goldfields, was also the focal point of wildcat strikes. On 02 October 2012, the Johannesburg-headquartered company forcibly removed 5,000 striking workers from its dormitories, over accusations that they were “intimidating” other employees by preventing them from going to work. Altogether, analysts claim that 75,000 miners are currently engaging in walkouts, most of which are illegal, in South Africa. Not only have the strikes been costly (according to reports, the three weeks of illegal walk-outs in Rustenburg alone set Amplats back by approximately US$82 million), they have also been worrisome for business leaders who are likely concerned over South Africa’ ability to prevent mass unrest, as well as to maintain security in the case demonstrations of this nature continue.

Short-term Challenges

In the short-term, the security situation around Amplat’s operations are likely to remain precarious, and despite reports that police forces have increased their presence in the area, clashes between rival unions, as well as eruptions of violence between police and workers, may resume. The Inkerman Group maintains that there remains a likelihood for protests to continue, and to turn violent. However, if personnel take the proper security precautions, such as maintaining a low profile and avoiding mass gatherings and demonstrations, as well as refraining visiting high-profile protest targets, this risk should be significantly reduced. Bathopele Mine, which is reportedly the only Amplats operation that has continued without major interruptions, is also likely to see demonstrations, although on a smaller scale. On 11 October 2012, police reportedly arrested forty people at the site for “public violence”. Such protests are likely to continue even after 15 October 2012, when strikers are expected to meet with officials to discuss new salary packages, as all parties have yet to agree on salary requirements. For most workers, a R12,500 (US$1,452) basic monthly wage would put an end to the illegal action, however, these demands fly in the face of many business leaders who have rightly suggested that such an increase would be detrimental to the company’s economic competitiveness.

Long-term Challenges

Amplats, like other mining companies, are likely to continue to be beset by protests and wildcat strikes. These strikes are also expected to continue to devolve into violence, as South African police forces remain unable to muster up the strength to counter the 75,000 or so demonstrators. Traditionally, President Jacob Zuma’s African National Congress (ANC) and its political ally, the trade union giant, Congress of South African Trade Unions (COSATU) (which heads up the NUM), have been able to contain strikes, such as those aimed at Amplats, by heeding calls for pay rises. However, the relationship between the three parties: the worker, the ANC, and COSATU, may have been damaged beyond repair. Accusations that COSATU bosses have been cozying up to the ANC at expense of the worker, who they have promised to protect, have been hurled as head honchos from the union federation have also been accused of orchestrating some unsavoury deals in order to secure positions within the government. As a result, Amplats, Lonmin, and other mining firms are all likely to pay the ultimate price. Workers are expected to continue ignoring calls for peace from Amplats and other mining business leaders, as well as from ANC officials, and even COSATU higher-ups. Indeed, knowing that no one in power seems competent enough to put a stop to the illegal strikes, many of the workers may even feel emboldened: some have even asked for their yearly wages to be tripled. If Amplats, like other companies, fail to meet workers’ demands, striking employees in the long term may  sign up for the newly formed AMCU union, which has a more ‘militant’ image. This is highly concerning, as unlike the NUM, the AMCU does not have officially relations with the Zuma’s ANC Government through the COSATU, suggesting that its members are far more likely to resort to violent means to achieve their ends.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s