South Africa’s union war for platinum and how the miners got it wrong – by Ed Stoddard ( – August 20, 2012)

Industry insiders, companies and unions know the sector has some very tough decisions to make, but it’s not just platinum that is at risk.

LYDENBURG, South Africa (Reuters) –  South Africa’s platinum promise of prosperity has turned into a heap of broken dreams for Vusimuzi Mathosi, one of 2,000 workers laid off by Aquarius Platinum at its Everest Mine.
“This place can only be sustained with platinum. What can we do now?,” he told Reuters near the one-room box he and his family call home in a dilapidated township on the outskirts of Lydenburg, 300 km (180 miles) east of Johannesburg.
He belongs to the Association of Mineworkers and Construction Union (AMCU), whose b loody turf war for members with the dominant National Union of Mineworkers (NUM) was the backdrop to Thursday’s killing of 34 striking platinum miners by police at the Marikana mine.

When Aquarius, the world’s 4th largest producer of the precious metal, closed production at Everest, it cited worsening industrial relations stemming from the AMCU/NUM battle which has turned workers into warriors across the platinum sector. 
The country’s ruling African National Congress is in a governing alliance with the NUM-affiliated national union confederation COSATU, and a perception has filtered down the shafts that the rank and file are not getting a fair deal because NUM is in bed with companies and the ANC.
This has been a common refrain among several AMCU workers Reuters has interviewed in recent weeks, from Lydenburg to the main platinum belt where police on Thursday opened fire on striking workers employed by Lonmin at its Marikana operations northwest of Johannesburg.
“The NUM, they have shares in the companies,” said Fannie Bhengu, an AMCU branch chairman in Lydenburg.
Past NUM leaders who are ANC heavyweights include Cyril Ramaphosa, a business tycoon who sits on Lonmin’s board. In his labour days, he led a strike 25 years ago that saw 11 mineworkers gunned down by police.
The NUM denied it had shares in mining companies, or that it had too cosy a relationship with the management of those companies.
AMCU and other upstart unions have however been drilling into a growing seam of discontent and poaching NUM members or picking up the unorganised at Lonmin, Aquarius and at the world’s largest platinum mine run by Impala Platinum, which shut for 6 weeks early this year amid labour blood-letting.
The groundswell of revolt against the NUM is tapping into the same popular anger with poor government delivery of services that is confronting the ANC, marked by frequent riots in poor townships and squatter camps.
“It is not incidental that the challenge to the historically dominant union NUM, affiliated with the ANC, is taking place within a context of growing grass-root contestation to the performance of government,” said Claude Baissac, managing director of mining consultancy Eunomix.
More mine shafts across the industry may be forced to shut as it faces union militancy, soaring costs and low prices linked to the sluggish global auto industry as platinum is the key ingredient used for emissions-capping catalytic converters.
The gold sector also embarked on a painful process of restructuring over a decade ago as the price of bullion slumped, leading to tens of thousands of job losses and South Africa’s fall from world No. 1 gold producer to 4th place.
“I think the platinum guys are just starting to work out what the gold industry has been through. So they have some hard decisions they have to make,” Mark Cutifani, chief executive of AngloGold Ashanti, told Reuters.
But the path blazed by gold, which has made the South African industry lean, mean and profitable, will not be an easy one for platinum to follow in this highly charged new era of social discontent, union rivalry and global economic woes.
Geology is also an obstacle as big South African gold miners such as AngloGold and Gold Fields now get half or more of their output from outside the country. But about 80 percent of the world’s known platinum reserves are in South Africa.
South African gold companies aggressively trimmed their payrolls while the pro-market Thabo Mbeki was president, giving them political space to cut a labour force that numbered 300,000 in 1996 but is now down to around 130,000.
Those were the heady days that followed the demise of white apartheid rule. Almost two decades after Nelson Mandela became South Africa’s first black president, that optimism has faded into frustration as many miners still toil in harsh and dangerous conditions for as little as 4,000 rand ($480) a month.
Average gross monthly earnings in mining are around 14,000 rand, according to government data. This is slightly above average but the median figure for mining masks stark differences across the pay scale.
Social conditions for mining communities in the platinum belt have also not improved, according to a report released this week by the Bench Marks Foundation, an NGO backed by churches.
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