[miningmx.com] – AN agreement prepared earlier this month at an emergency summit involving the South African government, the mining industry and its unions that revisited proposals to improve labour relations on the country’s mines, as well as ensure sustainable operations, has met with a fair degree of scepticism from analysts.
The widely communicated criticism is that of Peter Attard Montalto, chief strategist for Nomura International, who said the pact – the fruits of deputy president Kgalema Motlanthe’s intervention in the mining industry at the behest of President Jacob Zuma – was merely a pre-election palliative.
“Overall we think government is still in what can be said to be largely a stalling exercise to hold the situation down until after the election,’ Attard Montalto said in a note on June 14 of the summit document, titled “The Framework Agreement for a Sustainable Mining Industry’.
He believed that once National Elections were complete, the mining industry, and the platinum sector in particular, would face “. significant restructuring and job losses in our view’.
It’s a view supported by CIBC Capital Markets analyst, Leon Esterhuizen.
“The general view seems to be that the current unholy alliance between labour and the government will run much colder once general elections in May 2014 have passed. This view essentially implies a significant level of “scratch my back and I’ll scratch yours’ between labour and the government,’ Esterhuizen said in a note dated June 3.
He also drew a comparison between the 50 lives lost in the recent spate of platinum industry violence with its declining profitability and a similar and permanent industrial decline in the gold sector during the early Nineties in which some 80 miners’ lives were lost amid mine violence.
“So here we are back with platinum – another of those “once in a lifetime’ opportunities for South Africa,’ said Esterhuizen. “The country has the opportunity to save it, but runs the risk to destroy it,’ he said of ever increasing demands by unions for higher salaries even though about 65% of the industry was loss-making prior to the deterioration of the rand/dollar exchange rate.
Motlanthe’s document, however, doesn’t seem quite the “band-aid on the gaping wound’ that some criticism would have us believe. Not entirely.
For instance, it meaningfully takes up the cudgels of Lonmin’s insistance (and that of former Impala Platinum CEO, David Brown), that “majoritarianism’ favoured by labour organisations in the past now requires qualifications to provide for a more diverse labour relations environment.
Lonmin has offered the Associated Mineworkers & Construction Union (AMCU) the same recognition rights afforded to the previous majority union at its mine, the National Union of Mineworkers (NUM) over lower paid worker categories, but has declined to give it representational rights over other categories where AMCU is not dominant.
According to the Framework Agreement for a Sustainable Mining Industry, the South African government said it would work with business and labour to “explore various instruments to address any possible unintended constitutional consequences in the application of the majoritarian principle’. This would include “. introducing an instrument in law’, it said.
Of course, legislating a new labour dispensation implies a long-term outcome where short-term interventions are required.
The participants of the summit included AMCU which now has until June 26 to assess the import of the document. It will be a important step forward if it embraces it. “I think the deputy president has tried his best to bring the parties together,’ said Mike Teke, deputy president of the Chamber of Mines of SA. He didn’t think it was “a fluffy document’ as some have observed.
“And I think that when Mathunjwa [Joseph, president of AMCU] comes back with the document it will be signed,’ said Teke.
