On Mining and Labour

For many years now, since even during the economic “boom” years of the Mbeki administration with its promises of trickle down prosperity, mining has contributed increasing less and less to the nation’s gross domestic product (and yet, if UNCTAD reports are to be believed, has received the bulk of foreign direct investment flowing into South Africa, even with a 74% drop in total FDI between 2014 and 2015). In the ten years between 2005 and 2015 mining (and quarrying, as it is classified in SARB reports) has decreased by an average of 0.35% annually, continuing a steady trend downwards. A trend the origins of which can be traced back as far as 1993 when mining held the lion’s share of contributions to GDP at levels close to 20% before reaching 12% by 2015. 

For nearly 150 years, the men (and, lately, women) of this country have toiled underground, at great risk to their lives, to dig up ore of varying composition and quality. Gold, our most prized element - holding, as we do, the worlds largest known reserves of the stuff - comes out in such poor quality ore that one ton of earth must be excavated to yield a mere 5.6 grams of pure gold. That alone should have been enough to divert resources to unlocking the secret of the philosopher’s stone, were it not for the notion of “cheap labour” that we have become most famous for over these past few centuries. Today we have the curious situation where, as noted in a tweet by mining and labour analyst Mamokgethi Molopyane, “those who actually do (the) physical work to create the wealth of this country earn less than R5 000 on average”.

On August 16, 2012, 34 miners were ruthlessly gunned down by members of the South African Police Services’ Public Order Policing unit. Their crime: demanding an across the board minimum monthly salary of R12 500 - twelve comma five like the big bag of sugar/flour/mielie meal that gets many low income families going through the month. You would have to be blind to the everyday reality of thousands of households who depend on incomes as meagre as R4 500/month that some mine workers reported to be earning at the time - for some, unchanged since the 80s - to miss the poignant and poetic symbolism contained in demanding itwelf-koma-five. Even after the tragic event, even after the international outrage and national mourning that followed and continues even to this day, those miners are yet to realise their dream of earning what was then slightly less than the national average for the year. Every time there is any protest that seeks social justice involving anything to do with money, the reflex reaction from those appointed to mind the gates to the bountiful wealth of this country is to blame the economy for not being efficient enough to produce equitable outcomes - as though they themselves aren’t active agents in the working of Adam Smith’s “invisible hand”. For mine workers on the platinum belt, the excuse was the financial meltdown of 2008 and the sluggish global recovery therefrom. 

Thomas Piketty, seemingly playing devil’s advocate and referring directly to the tragedy at Marikana, argued in Capital in the 21st Century that perhaps the best way to proceed would be full disclosure on the financial state of the mine, using the example of Rhenish capitalism as a lesson in how to reconcile competing interests in industry (profit maximising vs maximising the price for which individuals trade leisure for labour, according to the neoclassical model). But full disclosure is not a thing one can trust South African mining houses with, as evidenced by the tasking of the Davis Tax Committee by the National Assembly to look into transfer pricing. For the uninitiated, transfer pricing is the commonplace act of moving profits from the operational organisation to a separate but related organisation, usually one registered in a tax haven, in order to “avoid” (and evade) taxes in the land where the profits were first earned. The committee, comprised of some of South Africa’s sharpest economic and legal minds including experts on inequality like Prof. Ingrid Woolard, have gone on record citing the many challenges they face in determining when such pricing is indeed avoidance (which is legal) and what is evasion (which is illegal). Such challenges also include the lack of capacity within the state revenue agency, SARS, to investigate and bring offenders to justice. What chance then do mineworkers have - many of whom are barely literate, -against such sophisticated obfuscation that confounds even those who profess to be experts in their field?

On March 22, 2016, Sikhosiphi Bazooka Rhadebe was murdered in his home, while his family watched helplessly. For him, this was a culmination of a long fight against the awarding of rights to a foreign multinational behemoth to mine the pristine and picturesque sands of Xolobeni - a stretch of virtually untouched beach on the Wild Coast of the Eastern Cape. It is not known definitively who killed Bazooka, or who, if indeed at all, ordered his assassination. What is known is that there is a large Australian mining company interested in the titanium that lies, ripe for the picking, in the sands of those beaches. Politics of the stomach have given rise to an internecine conflict within the community represented by AmaDiba of Xolobeni. Sluggish economic growth, growing unemployment all serve to create a powder keg of conditions within the community with those who see the job opportunities presented by potential mine operations pitting themselves against those who wish to retain the community’s control of the land. It is not the intention of this article to put intentions in the minds of this latter group, but instead to outline a perspective on the history of mining and the notion of citizens acting merely as labour for the enrichment of foreign interests.

Mining is clearly on the decline and, as also astutely observed by Molopyane in another tweet, South Africa needs to prepare for a life after mining. South Africa should have started preparing for such a reality when mining first lost first place to financial services with regards to contribution to GDP nearly a decade ago. Currently in third place (if we disregard government services), there doesn’t seem to be any hope of a resurgence, especially considering the fact that mining by definition deals in non-renewable resources. The only way in which mining could re-emerge as the champion of economic growth is through the discovery of new mineral deposits such as those at Xolobeni. However, the idea that the community residing in the area - a community that faces great upheaval should mining go ahead, including the disruption of burial grounds - should serve only to as a source of cheap labour to mine the wealth of the land of their ancestors to expatriate to the asset portfolios of foreigners is beyond insulting. Knowing what we know about the exploitation of South African mine workers, we cannot, in all good conscience, stand by and allow the repetition of the mistakes of yore, which all but brought the economy of this country to its knees. 

It cannot be denied that the people of Xolobeni are sitting on a proverbial gold mine. For them to not realise, in real monetary terms, the wealth contained in those sands while trying to keep the wolf of poverty at bay would be a great tragedy. Add to this the very real possibility that strong lobby groups paid for with Australian dollars may eventually manage to sway the government to force the community to accede to the pressure, and the tragedy takes on the aspects of dark comedic farce. A combination of Rhenish capitalism, cooperative mining and public-private partnerships where the community retains complete equity on mining operations and merely pays fees (regulated by government to ensure fairness) to the mining houses and related operators for the management and operations of the mine seems like the best option. From this the community may follow the path of nations like Saudi Arabia and Norway who have built vast sovereign funds from their natural resource endowments and are now able to diversify away from these as they move into a future that is not threatened by the declining reserves of non-renewables.

[Originally published in the Comment & Analysis section of the Mail & Guardian's 02 June 2016 edition. Also available here.]