Mining companies should commit to SA

2014-07-08 10:00

The dust is still settling after the protracted, five-month violent strike in the platinum belt. The mine workers who were on strike are trickling in for induction and retraining before resuming their duties.

The government, as articulated in the president’s recent state of the nation address, has committed itself to direct involvement in transforming the mining industry. Among the objectives identified is ensuring that social labour commitments and the mining charter are fully implemented.

This will help us realise our intention to ensure that living conditions of mine workers, and the areas around which they live, are improved. The president indicated he would be leading this daunting effort.

In the midst of all this, Anglo Platinum announces it is considering disinvesting in the platinum sector. This is conveyed as putting on sale what are said to be unprofitable mining assets.

What is critical is the potential impact of such a pronouncement in a difficult economic climate, particularly where some ratings agencies have downgraded the country and forecast low growth.

This cannot be seen as a statement of confidence in the country and the bold intentions for growth stated by our government.

We must recognise this trend in the mining industry. Usually when one company does it, others follow. Obviously, we cannot divorce the announcement from the recent platinum strike and its aftermath. There are a few other concerns we should raise regarding this.

First, there is a notion among mining companies?– whose origins are South African but who have acquired international acclaim?–?to find it easy to abandon their national roots. They seem to place greater value on their global status. In our case, this is most discomforting when we are cognisant of the sacrifices of the black majority in creating wealth for these companies.

Anglo American, which owns Anglo Platinum, began its disinvestment in 1999 when it moved its primary listing to London. In 2009, the company had nothing left in the country. Other companies followed suit with much resistance from the National Union of Mineworkers. The ease with which South Africa and its government let this happen is the reason we, today, have to deal with the challenges we now confront.

There is a seeming ignorance about the impact of a company opting to list on a foreign stock exchange.

The implications are that the company is no longer held accountable to national demands. In addition, the national stock exchange loses its prestige to the foreign one. These factors count when ratings agencies look at a country’s economic standing and performance.

Second, is the concept of unprofitable assets or mines that is bandied about.

This usually comes on the heels of these companies having mined shafts for a long time.

The practice is to mine the rich ore within relatively easy reach and, once that is depleted, to off-load the mines. These mines are usually passed on to a so-called BEE outfit that will barely make an impact on the life of the mine and its employees. The consequence is greater misery for the workers as we have seen in recent examples.

Third, the mining industry has been talking about unprofitable assets for a while. These are not seen as part of the business and, therefore, needing assistance for meeting overall objectives instead of narrow profit margins.

It remains unclear why the companies do not want to consider the option of ring-fencing what are seen as unprofitable assets without having to off-load or put them on sale. This approach could ensure that profitable assets continue to protect and support the weak ones. Clearly, such a strategy could go a long way towards preventing unnecessary job losses and the resultant compounding of the unemployment problem.

As a result of this overemphasis on profitability, the national priorities are ignored. The cost to individual workers and the country are seemingly of minimal consideration. The potential for job losses when these types of assets are sold off is huge.

Lost employment in the mining industry, considering the low skills base of labour it employs, translates into a further burden on the country’s social wage. It adds to the depression in the labour-sending areas that are already destitute.

We should also recall that the mining industry, with the business sector, government and labour, committed to halving unemployment by this year. In the face of these pronouncements, the question that arises is whether companies like Anglo Platinum are interested in making a contribution, or it is only about profits and dividends for their shareholders?

It is not favourable to hear a South African company talking of off-loading or selling assets at a time when we need them to ensure whatever is at their disposal works. The expectation that government and labour should play their part in bolstering the economy also applies to the private sector.

The mining industry is no exception. It may no longer be the leading contributor to the economy, but it remains an important component thereof. It continues to be a major employer of our people, particularly low-skilled labour.

If South Africa is going to move forward,we should all make a concerted effort to realise it.

Duarte is deputy secretary-general of the ANC

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