[miningmx.com] – MINING is an unhappy industry all over the world, but in South Africa, hostility, suspicion and violence play as big a role in the misery as the global decline in demand for resources.
It doesn’t help lift the industry’s spirits either that there is a stuttering power supply, as well as onerous – and fluctuating – regulatory and empowerment requirements.
However, it is a disruptive and increasingly violent labour force that is creating the biggest worries and scything enthusiasm in the industry.
Mining houses are being caught in a vicious cycle of falling revenue necessitating job or pay cuts which kicks off union demands and – often – strike action. The need for higher wages is increased by a stalling economy which further constrains employment possibilities and results in over indebted and desperate blue-collar workers.
The Association of Mineworkers and Construction Union (AMCU) has has seen its membership grow exponentially as conditions in the country and the industry grow steadily worse.
AMCU grew out of an ugly battle with the National Union of Mineworkers (NUM) in 2008. The union’s president Joseph Mathunjwa, then a NUM member and branch chairman had been a laboratory assistant at what was then Ingwe Coal’s Douglas Colliery.
Under Gwede Mantashe, who was then Secretary-General, Mathunjwa was accused of mismanaging funds and bringing the union into disrepute. Mathunjwa, who was already a massively popular leader, was ousted from the union – and the 3000 strong workforce promptly went on a two-week long unprotected strike in solidarity.
While the mine management re-employed him, and he was exonerated by the NUM disciplinary committee, Mantashe insisted on a second disciplinary hearing that he was to chair himself. Mathunjwa balked and split from the long-established Cosatu-affiliated mining union and went on his own taking several thousand NUM members with him.
AMCU began to slowly gather members from coal, chrome and iron ore mines in the Mpumalanga and Kwa-Zulu Natal provinces. It also gained serious traction in the construction industry, particularly among contract workers.
In 2012, the rest of the world was forced to sit up and take notice of the increasingly vast and powerful union as chaos descended on the platinum belt in the North West province.
Members began to leave the NUM in tens of thousands over a matter of weeks after rock drill operators (RDOs) went on a six week illegal strike at Impala Platinum. The RDOs who felt let down by the NUM when they were denied increases given to other category workers, decided to go it alone and get the increases without their union’s support.
This resulted in AMCU getting its first significant foothold as frustrated mineworkers found a new leadership that heard and supported them. The surge in support sparked more violent strikes at Lonmin and Amplats later that year eventually culminating in the horrific killing of 32 miners at Marikana. NUM and AMCU members, mine management and the police all blamed each other.
Mathunjwa has become something of a cult figure with his leadership ability, his capacity to rouse emotion – and his rallying cry of R12,500 (in pay per month) or nothing. AMCU membership in the platinum belt stands at around 120,000 – about 70%. The NUM has about 20% and smaller unions together account for about 10%
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AMCU earlier this year led a five-month strike involving about 70,000 mineworkers all but drowning global platinum supply.
The union pointed out that upper management were taking home massive salaries. Mining bosses say they deserve what they get, after all who would do the job for less?’
Amplats’s 2013 annual report showed CEO, Chris Griffith, was paid a total R17.6m. He made the spectacular faux pas of saying: “Must I run this company and deal with all this nonsense for nothing? I’m at work. I’m not on strike. I’m not demanding to be paid what I’m not worth.’
In June the strike ended when the union signed a three-year agreement with the employers for a R1,000 increase for the two lowest bands of categories.
AMCU is making serious in-roads into the gold industry, where it has already scooped around 30% of all mineworkers, mostly concentrated at Sibanye Gold, Harmony Gold and AngloGold Ashanti.
Pundits don’t expect labour conditions to get easier going forward. “The union has far too much leverage,’ said one analyst who could not be named. “The genie is out of the bottle.’
He said “it would be tragic’ if the union reneged on its three-year wage agreement. “All hell will break loose.’ He said he didn’t anticipate industrial peace in 2015.
Wayne McCurrie, head of Momentum Wealth Portfolio Management, predicted that labour action was going to get worse across the board.
Next year would be “… the winter of our discontent as far as labour is concerned”, he said. A general shortfall of cash resources would drive demand for wage increases and were likely to result in further strikes.
Asked whether AMCU could be expected to continue its militancy or mellow in maturity, Zingaphi Matanzima, head of communications at the Chamber of Mines, said only that it “hoped for improved relations from all labour unions’. It was a telling response. In June the Chamber infuriated AMCU by obtaining an order from the Labour Court in Johannesburg preventing it from striking at mines owned by AngloGold Ashanti, Harmony, and Sibanye Gold.
Peter Major, head of Mining & Resources Division at Cadiz Corporate Solutions, said the results of AMCU’s violent and protracted strikes still had to be tallied.
“[Mathunjwa] still hasn’t told [union members] the price they’re going to pay. Although even “we’ won’t be able to fairly estimate that for another six to 12 months,’ he said.
“How can it benefit workers to bring to the mining companies to their knees? They are all in huge debt as it is and investors are totally fed up’. Mathunjwa is tipping the playing fields away from underground towards open pit mining, he said.
The latter requires 80% fewer workers and much bigger machines – most of which need to be imported sending much needed cash out of the country. Even worse, those machines require huge amounts of expensive and imported diesel.
However, Major believed that Mathunjwa was becoming “less radical’ and that AMCU was becoming gradually less militant.
Still, the general direction mining was heading needed to be changed. Dramatically and fast! It’s too late to save the gold industry. But we still have a small chance on the platinums. Mathunjwa needs to “help increase productivity to generate more money and jobs for everyone,’ he said.
Major said that gold mining – with its declining yields and increasing costs – would not be able to sustain protracted strikes and increased wage outlays. Under these circumstances, Major predicted deep level gold mining in South Africa would be all over by 2020.
