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South Africa: Rumbles at the rockface

By Gregory Mthembu-Salter in Johannesburg
Posted on Monday, 27 July 2009 13:41

With South Africa entering its first recession since the advent of democracy in 1994, the mining sector has begun to shed jobs, and there is new pressure from communities negatively impacted by mining, who forcibly expressed their discontent to politicians on the campaign trail in April. In a speech to the National Union of Mineworkers (NUM) in May, President Jacob Zuma said he had found “a simmering unhappiness” in these communities, where “people feel that despite progressive legislation, the mining industry and government are not doing enough to ensure that they, too, fully reap the benefits.”?

New mines minister Susan Shabangu has initiated a review to look at mining companies’ Black Economic Empowerment credentials as well as the implementation of their social and environmental responsibilities. Many civil society activists doubt the review will bring real change. Richard Spoor, a lawyer working on behalf of communities affected by mining, says: “There is still no effective system in place to measure the costs of mining against the benefits. Ministers can promise what they like, but it’s like playing with a loaded pack of cards, where jobs and investment always trump, and social costs and environmental costs always lose.”

Setting mining benchmarks

An important test will be in Waterberg, Limpopo Province, where new coal-mining licences have been granted. The operators may have met environmental and social benchmarks, but there is concern that there is too little water in the area for both mines and communities.

For NUM general secretary Frans Baleni, the big challenge is to get a much talked about state-owned mining company up and running: “The state must conduct an audit of state entities with mining resources and consolidate these assets.” Baleni says the NUM also wants action from government on beneficiation to ensure South Africa exports value-added goods rather than just raw materials.

Mine operators are sceptical about beneficiation. Rio Tinto operates South Africa’s Palabora gold and copper mine and smelter, and has 50% of an iron ore mine and smelter in Richard’s Bay. Rio Tinto’s chief executive in charge of energy and minerals, Preston Chiaro, says mining companies do not have the expertise: “Gold miners aren’t jewellers. Coal miners don’t usually build power stations. But one thing we can do is smelting. That’s our downstream.”?

Rio Tinto is still deciding whether to proceed with its energy-hungry Coega aluminium smelter in the Eastern Cape at a time when energy supplies in the country are already over-tight. Spoor comments: “We all thought initially that the Coega smelter would be a welcome example of beneficiation, but it turns out to be based on our selling off our electricity capacity too cheaply.” If Coega is built, it will be some years down the line.

This year, meanwhile, the NUM has demanded a 15% wage hike in the gold, diamond and coal sectors and a 20% rise in the platinum industry. So far the Chamber of Mines has offered a 7% increase. Both sides talk tough, but industry analysts expect a settlement without recourse to strike action.

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