Has the sun set on SA mining?

The abandonment of compounds by mining companies hasn't resulted in decent housing for mineworkers. File picture: Themba Hadebe

The abandonment of compounds by mining companies hasn't resulted in decent housing for mineworkers. File picture: Themba Hadebe

Published Dec 13, 2015

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The mining core of South Africa’s economy saw, in 2012, the most explosive and significant strike wave since the defeat of apartheid which challenged the terms of settlement in the industry and the low wage regime on which it rests.

At Marikana, it involved the killing of 34 Lonmin strikers by police on August 16. These events, and the response to them by the ANC, Cosatu and the SACP, starkly revealed key economic and social issues in South Africa today, highlighting how many features of the apartheid system have not been so much preserved as reproduced and even intensified.

Further, the strike wave threw the labour movement into acute crisis as many members of the National Union of Mineworkers led the strike wave by rejecting the union’s politically powerful but industrially conservative leadership. Many workers joined the Association of Mining and Construction Workers Union (Amcu), the rival union formed in 1999.

Now, once more, the industry is in the grip of a crisis, which the media all too often suggests is terminal despite the scale of South Africa’s mineral wealth.

Systemic factors

Against this backdrop, we suggest that there are four systemic factors underpinning events at Marikana and South Africa’s political economy more generally.

Mining starkly exhibits these central features – monopolistic industry structures, tight corporate control, vertical integration, and the co-option of emerging black capitalist interests.

It also reveals the continuing emphasis of post-apartheid economy on exporting minerals over local beneficiation, the diversification of the economy, and greater employment generation.

The first is the nature of South Africa’s extractive economy, highlighted by the notion of the Minerals-Energy Complex (MEC).

The MEC refers to the core set of heavy industries, powerful vested interests and institutions which evolved around minerals extraction and processing and their interaction as a distinctive system of accumulation whose dynamics and linkages have long determined South Africa’s evolving patterns of industrialisation.

Critical actors in the MEC were the six mining houses that grew out of the minerals revolution in the late 19th century, established the migrant labour system, fused with Afrikaner finance capital in the 1960s, and diversified ownership out of the minerals and energy core so that by the 1970s and 1980s they dominated the whole economy. The concentration of both industrial and finance capital in the MEC core rested both on state support provided for key sectors, particularly through the establishment and development of energy parastatals, and beneficial tariff and pricing policies, combined with extreme exploitation and political oppression of the black majority.

Political settlement

The political settlement of 1994 protected white capital, despite more radical demands from the liberation movement. Since 1996 the ANC has reduced capital and exchange controls and allowed conglomerates to move their primary listings abroad, which they have combined with intensive unbundling at home.

This has involved selling some of their (often less productive) assets to the aspirant black bourgeoisie which was regarded by many as an essential buffer against more extensive attacks through wealth redistribution and other and more far-reaching policies.

These developments have both reproduced and transformed the MEC’s determining influence across the economy. The foreign listings and unbundling of big productive capital have meant a (domestic) focus on their productive mining core and an emphasis on the internationalisation (and financialisation) of their operations. Simultaneously, this unbundling has led to the emergence of distinctively financial corporate groupings with an increasing amount of domestic power as the financialisation of the economy has intensified.

The post-apartheid economy then could be said to have been dominated, on the one hand, by the “three Fs” – (illegal) “capital flight, finance, and foreign ownership”, albeit served with a side-order of elite black economic empowerment.

The second issue that Marikana reveals is that much remains of the century-old migrant labour system, despite nearly two decades of reform of the apartheid labour market.

Wedded to the past

The mining industry remains wedded to its apartheid past in its dependence on cheap black labour.

Lonmin workers, and other groups of workers subsequently, have demanded pay rises from about R4 000 to R12 500 a month. Pay scales are complex, particularly as labour brokers hire about a third of the workforce across mining. Employment has been increasingly casualised, particularly through the sub-contracting of “non-core” surface jobs.

The migrant labour system, established by the mining houses at the end of the 19th century, entailed both racialised workplace organisation and a regional system of labour recruitment that drew in labour from across southern Africa.

The mining houses developed a strategy of stabilising the migrant workforce through a combination of repeat, long-term contracts and more localised recruitment.

Mine managers began to question the worth to them of the compound system, in part at least because hostels were becoming bases for union organisation in the 1980s.

But while the compounds have been abandoned by mining companies, this has not resulted in affordable decent housing for mineworkers, whether state- or company-provided.

Accommodation schemes

Accommodation schemes have been introduced, but this often takes the form of a subsidy for a bond to purchase a house.

Despite pressure to deliver alternatives, privatisation of housing provision has really amounted to workers being given a cash allowance to “live out”.

Many workers simply use this allowance to supplement their pay by living in the zinc “shack lands” which have sprung up around the mines. The third issue that Marikana exposes is the lack of adequate and co-ordinated planning of the development of such a large and important part of South Africa.

Municipalities are responsible for dealing with local development.

But haphazard and unplanned development of the built environment has been rampant.

This is at a time when the largest municipality in the core platinum field, Rustenburg, appears to have collapsed. Yet this has been one of the fastest growing parts of South Africa, and Rustenburg appears now not to be served by anybody amid myriad uncertainties.

Micro-lending

The fourth issue upon which Marikana has shone the spotlight is the informal financial sector and growing levels of unsecured debt.

The growth of micro-lending has been phenomenal recently despite legislation such as the Usury Act aimed at protecting the poor.

According to the National Credit Regulator, South Africans’ debt sits at R1.3 trillion, of which almost 10 percent is unsecured credit.

Some 62 percent of unsecured credit agreements come from those earning less than R10 000 a month, and 22 percent are from those earning less than R15 000 a month.

Some estimates are that for South Africans earning between R3 500 and R10 000 a month, as much as 40 percent of their income goes towards covering loan repayments. Of 19.6 million credit-active consumers in 2012, 9.2 million of them are “impaired”, that is, three or more payments in arrears, or with an adverse listing or judgement or administrative order against their name. This often takes the form of garnishee orders.

Many mineworkers were striking for higher wages in part either because garnishee orders were leaving them with little on which to live or because they were indebted to the unsecured lenders operating either outside the mines or in the cash loan shops.

The present crisis

Marikana is the epitome of today’s MEC, reflecting both the economic and social failings of post-apartheid development for the majority across so many dimensions. It reveals the continuing power and determining role of the MEC and white monopoly capital, the virtually unconditional support given to it by the ANC and its newly enriched black elite, the persistence – albeit in changing form – of migrant labour, the appalling pay, working and living conditions of mineworkers and the confused and opportunistic complicity of sections of the labour movement to all of the above.

But what of the new catastrophe in the mining sector? The collapse of global commodity prices – including coal, platinum, iron ore, nickel and gold – has produced a new crisis in the mining industry.

Employers are proposing thousands more job losses. Anglo in particular has said it anticipates shedding 53 000 jobs over the next few years. Both Anglo and Lonmin have blamed the crisis on depressed commodity prices, erratic power supply, and rising labour costs.

Key “stakeholders” met recently at a mining “Phakisa”, ostensibly to develop a shared vision of how to transform the industry and bring about improved levels of investment in line with the goals of the country’s National Development Plan. Its aim also was to “fast-track” solutions to critical development issues, in particular how mining can contribute to beneficiation and broader industrialisation.

Job losses

But the agenda seems to have been dominated by the mining industry’s plans for further drastic job losses combined with extensive new mechanisation of the sector. In a sane world, the mechanisation of many mining jobs would be a good thing. But as we don’t live in a sane world, the job losses threaten once more to turn a crisis of profitability into a deepening of the social crisis of labour. The government seems to hope that job losses can be compensated for by increased employment in the sectors that provide inputs into mining, particularly capital equipment.

But if the MEC, South Africa’s system of accumulation, is to be changed, it means diversifying out of the core sectors and using minerals for much more systematic industrial diversification, aimed at developing downstream secondary industries within the domestic economy as well. Allowing mining capital to call the shots is not a recipe for success.

* Sam Ashman is Associate Professor in the Department of Economics and Econometrics at the University of Johannesburg, [email protected]; Ben Fine is Professor of Economics at the School of Oriental and African Studies, University of London; Visiting Professor at Wits; Senior Research Fellow attached to the South African Research Chair in Social Change, UJ; and Visiting Professor in the Institute of Social and Economic Research at Rhodes University. [email protected].

** This is a shortened and updated version of South Africa: The Meaning Of Marikana, by Think Africa Press.

*** The views expressed here do not necessarily reflect those of Independent Media.

THE STAR - WORLD OF WORK

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