SA mining is facing catastrophe unless it can manage the effects of its shrinkage

ACCORDING to the Minerals Council South Africa, full-time employment in the mining sector has shrunk by 56,366 employees over the past five years, from 509 909 in 2013 to 453,543 in 2018. In 1994, the sector employed 600,000.

In addition to job shrinkage, there’s also the disappearance of iconic companies from the investment landscape. AngloGold Ashanti is selling its last South African mining assets and Lonmin is being merged with Sibanye-Stillwater. There are also retrenchments looming at Lonmin’s facilities post the transaction, which is due for court sanction imminently.

Against this background it’s worth posing the question: what is the consequence of a shrinking mining? The answer is catastrophe.

Firstly, when a miner loses his job, it affects about ten dependents. There’s also a downstream impact with about 1.7 jobs being lost in the contractor and support services sectors for each permanent mining job that’s lost.

From a labour relations perspective, sector shrinkage means declines in trade union membership numbers. Trade union rivalry also mounts as unions try to poach members from one other. Fewer jobs for full time trade union representatives means increased internal jostling for those ‘gravy train jobs’ on offer at the dominant trade unions.

Given that the membership fees of the larger trade unions are about 1% of their members’ pay, unions want to negotiate higher increases in order to protect their own financial interests. Higher wages may mean more income from trade union membership fees, but it also converts into retrenchments.

Shrinking trade union membership numbers will inevitably see traditional mining trade unions organising in other, new sectors. This could lead to union tensions in those respective sectors and disturb the organised labour landscape nationally.

As companies scale down and focus on their own sustainability, the tradition of central collective bargaining through the Minerals Council’s platform will also start to disintegrate. Among other things, this will put trade union negotiators under more pressure as they start to engage in individual, mine-specific negotiating processes.

A third consequence is that job losses will be extended to technical training colleges. This will be a setback for empowerment through skills development. A shrinking sector also means that institutions whose existence is directly linked to mining will have to downscale; organisations such as the Minerals Council and the Department of Minerals and Energy. (The Minerals Council now only has 65 staff members, whereas this institution had 6,000 employees including training institutions at its peak). World class mining engineering departments in tertiary level engineering faculties, such as at the University of Pretoria and the University of the Witwatersrand, would also be adversely affected.

Fourthly, government’s tax take is falling. That is why mining royalties have been levied since 2010, and the Carbon Tax, which has come into effect on June 1, have been introduced in part to supplement government’s loss in revenue, even though it is also strangling mining.

The only (dubious) good news is that with less shifts being worked, less mining accidents and deaths should occur. The concern, though, is that safety standards usually drop when junior mining houses take over marginal mines. Costs are cut and production targets raised in an effort to make short-term profits. Ultimately, this compromises mine safety.

Finally, as mines close down the number of ghost towns will increase. In so many instances, mining companies have taken over the role of dysfunctional municipalities in mining towns, and if those municipal services rendered by the mining companies are steadily declining, then there will be an increase in protests by frustrated communities.

Moreover, illegal mining activities will proliferate as retrenchments increase as the jobless are driven into criminal zama-zamas activities. An increase in zama-zamas, in turn, would mean an increase in crime around mining communities.

To curb the decline in mining communities, government introduced its Revitalisation of Distressed Mining Communities Plan following the Marikana events of 2012. For the plan to succeed, it is key that the agricultural projects earmarked to eventually replace mining activities receive particular attention.

As mines have a limited time span, the decline in mining cannot be reversed but, in view of its consequences, and the fact that we still have sufficient mineral reserves, this shrinkage must be slowed by controlling some of these negative influences.

For this reason, the sustainability of the sector must be the focus of all mining role players as mining is important for all South Africans and we dare not allow it to be governed and managed into the ground.

2 COMMENTS

  1. Thanks for the Socio-Economics 101 lecture, Gideon.
    As long as we all remember and learn from your role in this debacle.
    Solidarity always boils down to one – a very lonely number.

  2. Let us have more.

    More BEE and more AA to combat the threat of competence.
    After all, business ownership should be evenly distributed to those who are most deserving.
    Drive out more capable skills and replace with socially acceptable ones because after all, social justice is that which feeds, clothes and houses everyone.
    Add more royalties and taxes on wealth producing businesses to support the social system which supports votes.
    Add more deficit spending on loss making SOEs to promote job handouts.
    Empower the medical industry by replacing good skills with those who have been socially disadvantaged.
    Empower the education sector with the same.
    Add more doubt regarding property rights and discourage investment related to this.
    With all of this we will finally have the Garden of Eden and unemployment will be a distant memory.

    Actually it may already be too late.
    The entrepreneurs that built the SA economy are almost completely gone.
    The ethics of honesty, perseverance and the recognition of competence are almost impossible to find.
    All that remains are some very confused souls who cannot fathom why the goose is not laying eggs anymore.
    Slowing down centuries of economic progress in just the few decades since 1994 requires a special level of self-denial.
    Instead of nurturing the economy and its skill base, as a farmer would nurture the crop that feeds him and his family, it has been treated as a prize to be won and the skilled, hardworking people within it, as a threat to be replaced.
    The end result is where we are now.

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