S Africa lays ground for mines deal

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As South Africa’s gold miners prepare crucial wage negotiations this week, Kgalema Motlanthe, deputy president, says he is confident that the mining sector will avoid the violent unrest that convulsed it last year.

But in an interview with the Financial Times he says he wants to see substantive changes in the industry, primarily replacing a migrant labour system that is blamed for many of the sector’s ills, but also greater consultation between the government and companies about any future restructuring.

As the head of a government team set up to seek solutions to the struggling sector’s problems, Mr Motlanthe last week oversaw the signing of a “framework” agreement by unions, companies and the government that is intended to lay the foundations for the stabilisation of labour relations. His hope is that the agreement, which commits the parties to a series of measures, will boost shaky investor sentiment.

“Investors really want to be sure,” he says. “They want predictability, and so to the extent that through the framework we will be able to restore industrial peace and [provide] very clear channels for dealing with problems, that should give comfort to investors.”

But there is scepticism that the agreement will make a difference on the ground, and the important tests lie ahead as gold, platinum, coal and other sectors gear up for two yearly wage negotiations.

Importantly, the more militant Association of Construction and Mineworkers Union (Amcu) has yet to sign the agreement, while the situation remains tense and unpredictable.

Investors were severely rattled last year by violent wildcat strikes that seized platinum and gold mines. At least 50 people died in the unrest and more than R15bn ($1.5bn) was lost in revenue. There have been more sporadic strikes and violence this year and all eyes will be on the salary talks as a crucial index of the health of fragile labour relations in Africa’s largest economy.

Unions have submitted high demands, with the National Union of Mineworkers (NUM) pushing for salary increases of 60 per cent for some categories of miners, while Amcu is demanding companies more than double the salaries of underground workers.

Amcu has grown exponentially in the wake of last year’s unrest and is now the dominant union in platinum and has an expanding foothold in gold.

Mr Motlanthe says he is unconcerned about the high demands, describing them as “opening gambits,” nor by Amcu’s decision not to sign the agreement. He puts the latter down to the weakness of Amcu’s structures and its desire to consult workers.

Yet the industry will be entering uncharted territory as Amcu will be involved in talks for the first time. The toxic rivalry between Amcu and the NUM has been blamed for exacerbating tensions and fuelling violence.

Still, Mr Motlanthe, a former NUM general secretary, is confident: “Good sense will prevail.”.

De Beers, the diamond miner, said on Saturday it had agreed with the NUM to pay increases of 9 per cent, which compares to inflation of 5.6 per cent

“The choice is you push and the mine shuts down and you have no workers to unionise,” Mr Motlanthe says. “Instead you have all these thousands of workers who expect the union to fight for their reinstatement.”

He does, however, say the government acknowledges the challenges companies face as they grapple with spiralling costs and a subdued pricing environment.

“It’s recognised. That is why we had to bring all stakeholders together – precisely because we understand that the industry is struggling,” he says. “It’s critical because mining remains central to the South African economy.”

There is also an acknowledgment that shafts will close as the industry matures – the gold sector has shrunk considerably during the past two decades. But Mr Motlanthe says downscaling has to be a managed process, with social plans adopted to offset job losses in a sector that employs some 500,000 people.

In January, Anglo American Platinum received an angry backlash by the government after it revealed drastic restructuring plans that would have seen the closure of four shafts and put up to 14,000 jobs at risk. After talks with the government, it scaled back the plans so that up to 6,000 jobs would be affected.

“When companies sit with their problems and they do a knee-jerk response of saying now we must cut down on costs, and the first thing is to dismiss workers . . . Then of course it gives rise to other problems,” Mr Motlanthe says. “That’s what we want to prevent. We want companies to be open, transparent, and [to] say: ‘We have difficulties’ . . . Then we can say: ‘Well, together, how can this be managed?’”

As for the migrant labour system, Mr Motlanthe says it could be replaced “almost immediately” if parties were to agree to a shift system, such as eight weeks on, two weeks off.

South Africa’s mining sector has been built on the back of cheap black labour with many workers recruited from poor rural areas far from the mines.

Workers are offered a “living-out allowance” – normally about R1,800 a month – if they choose to live outside company accommodation. Many take that option to supplement their incomes, but end up living in squalid shanties while leading dual lives with dependants in mining areas and their home districts, which they rarely see.

“We’ve got to do away with the migrant labour system, because the migrant labour system is the source of the pressures on the take-home wage of these workers,” he says.

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