It can’t remain a fool’s paradise

2012-09-29 13:03

The ongoing mining problems will not solve themselves. What’s needed is leadership, writes Songezo Zibi

The strikes in the South African mining sector appear to be escalating, much to the alarm of foreign and local investors in our economy.

Many South Africans are cynical of the often-quoted “investors” because, in the main, they are faceless and are associated only with profiteering.

Despite whatever perceptions or credibility we may attach to investors, it is their money that is often used to develop large business operations without burdening government with the responsibility.

It is, however, not the investors we have to worry about, but the future of our nation’s economy and its ability to support its citizens.

It is no secret most South Africans are under financial strain. Just like all other workers, mine workers are sinking under this burden.

The demand for higher wages is therefore very easy to understand.

While recognising this, we need to ask whether the mining sector can afford to pay the kind of wages being demanded and still remain profitable enterprises.

Profitability is important because it allows any business to invest that profit into sustaining and growing itself. After all, growth means employment creation.

However, a report produced by global investment bank JP Morgan Cazenove this month showed that most platinum operations were unprofitable due to rising costs – mainly for labour and energy – and the poor price for the metal.

At the time the report was tabled, platinum was trading at about $1 500 (about R12 300) per ounce, while the cost of producing an ounce was between $1 600 and $2 000 – meaning losses of between $100 to $500 per ounce for many operations.

For many reasons, it is not easy for most South Africans to believe claims that mining operations are not making profits.

It also does not help that when large profits are made, they are not seen to be equitably shared. So there is very little sympathy in times of difficulty – as it is the case now.

The facts show broader society, mine workers and mining companies themselves are under strain.

In such circumstances, it is clear that simply increasing wages substantially will only solve part of the problem, for a very short time.

At this rate, it might be necessary for some of these mining companies to shut down several shafts.

The immediate practical implications are that platinum supply would be reduced, meaning the price would go up.

A higher price would make the remaining operations more profitable, allowing them to pay much higher wages to their workers.

The second implication is that the closed shafts would mean those who work there would be retrenched and face worse difficulties than they do now.

This raises questions about whether we are having the right conversation at this time.

It appears that we have completely rejected the responsibility to listen to and hear one another.

Our difficulties have seemingly caused us to only look at our own narrow interests and forget that in order for South Africa to work effectively, we have to work at some level of partnership.

It is not enough for the mining companies to merely say they cannot afford the high wages demanded or for workers to say they do not care about profitability of the operations at which they work.

It makes little sense for unions to believe solutions only lie on the wage-negotiation table.

It is not totally honest for some in government to simply blame the mining industry and the workers instead of showing proactive leadership.

We are all looking after our narrow interests and hoping our stakeholders’ problems will solve themselves.

This is a fool’s paradise.

Problems do not solve themselves.

They need brave leadership that believes in innovation and short-term sacrifice for long-term benefit.

To have a proper conversation we have to look beyond narrow interests and understand the most urgent fears of each stakeholder.

The propositions we put forward must be premised on an equitable sharing of the sacrifices as well as the benefits.

For workers, it might mean a lower rate of increase now but a better share of the profits.

As for the employer, it means proposing remuneration arrangements under which workers benefit in the same way shareholders do.

For government, it might mean providing the necessary relief for industries in distress so they can keep people employed instead of retrenching them if their difficulties are only for the short term.

There are no easy solutions but we have to start working on them.

» Zibi is a member of the Midrand Group

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