Platinum shrouded in controversy

2012-09-01 10:53

Global volatility, the costs of mining and continual standoffs with labour and communities make mining this precious metal something of a recipe for disaster

Platinum used to be the goose that laid the golden egg.

With 80% of the world’s platinum coming from this nation, South Africa should have been in the pound seat.

And for a while life was a party for the platinum mining companies in Limpopo and North West.

Towns such as Burgersfort and Rustenburg boomed. But then the recession hit, platinum prices fell, production slowed and input costs such as electricity and labour soared.

A surplus on the market didn’t help things either. Bubbling under the surface was platinum’s knack for attracting violence.

According to mining consultant Peter Major from Cadiz Corporate Solutions, platinum has not been a great investment, with gold outperforming it over the past 10 years despite the boom.

Platinum shares have also been poor and investors are asking why we are buying these shares if it only means trouble.

Yet, Major said, the poor price is almost double the average of the long-term platinum price, which should make platinum not that bad an investment.

“But only about half of Anglo’s Amplats and some of the Implats (Impala Platinum) mines are making a profit,” he said, “mining companies such as Aquarius and Eastplats are struggling.

“If you can’t turn a profit with double the long-term average price, you have to think twice about opening a mine.”

During the last six months, there has been a spike in platinum mines closing. That was before last month’s Marikana massacre.

“The platinum industry has seen more violence than any other mining industry,” added Major, “it is an ongoing and constant (threat).”

He said, however, that he doubted whether at the moment the violence might influence consumers buying platinum jewellery, but that soon people might start thinking twice.

Richard Spoor, a human rights lawyer and veteran of tussles between poor communities and platinum mines in Limpopo, said: “The last five years have been quite violent.”

The recently released study by the Bench Marks Foundation on life around mines in North West also showed that the mining industry faced massive socioeconomic problems.

Analysts looking at the cascade of violence around the mines believe that platinum’s boom years, when mines were flush with money, contributed to the violence.

Now that platinum’s money has dried up and mines have to close, layoffs are increasing and there is less money available for community projects, said Spoor.

Burgersfort and Maandagshoek in Limpopo, just on the border of Mpumalanga, have been sites of discontent near platinum mines.

In 2009, violence broke out in the poverty-stricken Maandagshoek after community members opposed the granting of new-order mining rights to three mines on the basis that they were often left out.

The police were called in and several arrests were made,while there were also some reported deaths among the striking miners.

Tensions simmered but erupted again in the region in February last year, this time at Platinum Australia’s Smokey Hills mine.

This was after a new labour broker caused discontent at the mine, which led to a violent wildcat strike.

In May last year, a minibus was ambushed by some of the dismissed workers, and a contractor working at Smokey Hills was killed by the angry mob.

Five other employees were hospitalised.

In Maandagshoek, supposedly one of the richest platinum areas in South Africa, the community fought against African Rainbow Minerals’ Modikwa mine and brought production to a standstill, despite numerous beatings and shootings during that time.

Also in Limpopo, Nkwe Platinum, a black economic empowerment startup mining company, has struggled to get their mine up and running amid community hostility.

Nkwe hired a foreign security company with Angolan and Congolese soldiers that conducted a reign of terror in the local community, said Spoor, adding: “My clients were beaten up, raped and shot at by this company (security guards).

“And then Platinum Australia hired the same company for Smokey Hills.”

The Bench Marks study noted that in North West between September and November last year, there have been outbursts of community protests in Marikana against Lonmin, in Chaneng against Royal Bafokeng Mine’s Styldrift operation and in Kroondal against Aquarius and Impala Platinum.

The recent Lonmin protests were only a precursor to the trouble brewing.

On May 24 last year, Lonmin dismissed 9?000 workers at its Marikana operation after a union dispute sparked an illegal strike.

Another prospecting project of Lonmin in Limpopo, it is reported, is repeatedly vandalised by the local community.

In February this year, trouble broke out at the world’s second-biggest platinum producer, Implats.

Thousands of protesting miners burnt tyres and torched a police office near Implats’ Rustenburg mine when a month-long strike turned violent.

About 5?000 miners blocked the road and were involved in a standoff with police. There were numerous beatings and police were stoned.

Spoor believed that the poor socioeconomic conditions of the communities and the rapid industrialisation of their environment were at the heartof much of the strife, as well as a poor understanding of the economic constraints of the mine.

Also, some communities believe that the mining companies have taken their land and are benefiting from it to their detriment.

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