This is one of the most sober, and sobering, analyses of the South African mining industry that I’ve seen in a long time. South Africa is a country that was built on mining, and a country that still has many tonnes of minerals and metals sitting in its rich ore veins. But, tragically, the environment in South Africa is slowly strangling the mining industry. As labour, government, and the mining companies grow more hostile and mutually suspicious, the scale of mining in the country slowly shrinks. Shafts close, jobs disappear, investment moves elsewhere, and abandoned shafts are the only reminder of what was there. South Africa’s metals can be mined safely and economically, but the venomous atmosphere, mistrust, suspicion, anger, and intransigence that marks the industry seem certain to strangle that possibility. – FD
GUGULETHU MFUPHI:  According to Finance Minister Pravin Gordhan, the strikes affecting South Africa’s platinum mines over the past ten weeks will cause less economic damage than the industrial action that took place in 2012. Joining us now for more, is Peter Major from Cadiz Corporate Solutions. Peter, just unfolding from the Finance Minister’s assessment, do you agree or is he perhaps taking a less serious approach to the platinum sectors strikes?
PETER MAJOR: Look, our poor Finance Minister has to put on a brave face, as it is really him versus the country, most of the time. He has to make many unpopular decisions, but he has to keep a positive image for foreign investment, and he has to make the 53 million South Africans feel better so he has, arguably, the toughest job in the country. I do however, think he’s either a little bit naïve or he’s painting a better picture than the reality out there. I don’t blame him for it, but we all have to start dealing in reality here, 100 percent Technicolor reality. That’s the only way we’re ever going to fix something.
ALEC HOGG:  But 2012 was disastrous, Peter. That was Marikana. That was everything to a grinding halt, so I guess at that point in time – and it wasn’t just the platinum sector – so it’s almost like saying ‘okay, we had a huge disaster on that side. This is a disaster, but not quite as bad as the disaster we had before’. The important thing here…and this is a thought I’d like to bounce off you. Anglo Platinum and Impala Platinum, two of the three companies with a united front here, have alternatives: they can mine on the Eastern limb and they can mine in Zimbabwe, but Lonmin doesn’t have alternatives. If Lonmin doesn’t produce from the west limb of the Bushveld complex where all of it’s mine are, it doesn’t produce any platinum at all. Isn’t that the weak link?
PETER MAJOR: No, not quite Alec, the weak link here is…this is more disastrous because with Marikana everybody was willing to assume this was once off, that this was a series of bad events that all came together and ended in horrible tragedy. This time, this was premeditated, this is ongoing, and this confirms there isn’t very much goodwill in the platinum industry. This confirms that between government, union workers, and management, they’re more at odds and ends, and against each other, than they’ve ever been. Whereas people were willing to make up after Marikana, you don’t see any signs of making up, so the platinum companies now know it’s some kind of ‘us versus them’ and they know they can never make these marginal shafts operate because they don’t have the buy-in from government, labour, and union. Now, all the platinum companies know we have to mechanise wherever possible, and we just have to cut. Wherever we can’t mechanise is going to be cut, moving forward, so there’s no long-term planning about expanding. The long-term planning is narrowed down to get minimum labour and maximum mechanisation, and we’ll just run on a reduced scale from here on.
ALEC HOGG: Â Are ore bodies open to mechanisation?
PETER MAJOR: Just parts of them are, and that’s the tragedy. Only parts of the ore bodies are, so we’re going to have very much smaller platinum sector with much less men, similar to our gold sector. We should be producing six-hundred-thousand to seven-hundred thousand tons of gold, with five-hundred-and-fifty-thousand employees, but as the environment is so poisonous and toxic between labour and management, they just continue to reduce to the highest-grade ore bodies and ones that lend themselves to some type of mechanisation. Labour, going forward, is the biggest negative and it’s the most important factor that all the mines are trying to reduce, to stay alive.
GUGULETHU MFUPHI: Â Peter, what is then the best-proposed solution, going forward?
PETER MAJOR: It would be massive re-education, which I don’t see the parties willing to undertake and even if they were, it would take five years. How can government start re-educating all the people here after 20 years of demonising the mines, that the mines aren’t demons and that they’re actually the only chance most of them have, of getting out of poverty? Government’s not going to change like that, and the unions built up their base by being more and more demanding against the mining companies. They’re not just going to turn around tomorrow and start educating the workers and saying ‘any job’s better than no job. A manual job – starting out – is better than no job, and you can advance if you work hard. If you become educated, you can increase productivity’. I think the education of it is the only salvation, and you don’t see the parties talking that yet.
ALEC HOGG:  And that’s where you started, Peter – a manual job.
PETER MAJOR: That’s where everybody starts…at the bottom, doing whatever you’re told as hard and as good as you can. You ask for advice. How can I improve? How can I do better? How can I make more? Management is there to show you how, to help you how.
ALEC HOGG:  But let’s get back to the three companies that are involved in this united front, and the point that Impala and Anglo Platinum do have other productions. That’s a point Chris Griffiths made today that their stockpiles are only half-down and they can continue for quite some time. What about Lonmin, though? Might they not blink?
PETER MAJOR: Look, Lonmin is trading at the lowest share price in 15 years. Everybody who has bought Lonmin has lost. Every investor that ever put a penny into Lonmin has lost. Now, either they just write off all that money and say ‘the billions and billions of Dollars we put into Lonmin…we must write it off’, or they will keep hanging on, trying to negotiate, and trying to find a solution to at least recap some of those billions of Dollars. You would think that the tens of thousands of employees at Lonmin would also say ‘geez, we don’t want you guys to walk away from billions and close the mine. Yes, maybe we’ll bend a little bit’, so that’s Lonmin’s choice. I think it’s a pretty easy choice for both sides. I think they both walk away and lose everything, or they both talk and bend a bit, and they can regain something. It sounds like an easy to choice to me.
GUGULETHU MFUPHI: Â Peter, is it too late for Lonmin perhaps, to find solutions to this issue?
PETER MAJOR: No, it’s not too late, and it’s not even too late for the union. Joseph’s trying to paint himself into a box, and now, he says he doesn’t want to lose face. He says the blood of the miners is on his conscience if he doesn’t get them that. He’s talking bloody rubbish. Why doesn’t he just have a ballot, let the guys vote what they want to do, and he puts his hands up and says ‘okay, I gave you my advice. I’ll do what you want me to’?
ALEC HOGG:  That’s what we call democracy, isn’t it? How are you seeing this thing playing out Peter, given that both sides seem to not want to move from their positions and remember that this is not NUM? NUM is still working. It’s the new union, AMCU.
PETER MAJOR: Look, both sides want a resolution, but here’s the hard part, Alec. AMCU is so far out of this planet. How do you negotiate with somebody on another dimension/another galaxy? If Amplats has been losing money year after year for the last five or six years, and if they’re losing money right now, any increase is going to make their losses bigger. How do you therefore negotiate with somebody who’s asking you to double your salary bill? It’s just a void…so big…and I don’t know why Joseph has gotten himself into this jam. Amplats will stay there until he wakes up, because they’re locked in. The money’s in the ground. The shafts are sunken. They have to stay there. Somewhere along the line, Joseph will wake up, or his men will wake him up, and they will get resolution and I just hope it doesn’t wait until our bloody elections.
