Mining industry needs to change its ways to stay relevant
SOUTH Africa last week commemorated the lives of the 34 mineworkers who perished at the hands of the police six years ago. The Marikana Massacre, in which the most marginalised of the country’s working people were brutally killed for demanding to be treated like other decent beings, remains the deadliest indicator of how toxic the collusion between the state and big business can ever be. We lived it under apartheid. We saw it in democracy. Sadly, Lonmin, the company that was at the centre of the wildcat strike that turned into the biggest blemish in post-apartheid South Africa, saw fit to use the opportunity to run an elaborate PR campaign. The company went into overdrive to showcase how well it was treating its workers. It said it had set aside R500 million to build better houses for the mineworkers.
“Housing has been a key focus of the company’s social and labour plans, with modern housing developments being built for many of its employees,” said human resources executive Khaya Ngcwembe.
“Lonmin’s financial investment in housing since 2013 will have reached R500m by the end of this year, funds that have made it possible to convert all the single-sex legacy hostels into 2 162 single units and 759 family units.
“A total of 1 240 apartments have also been built by Lonmin and will all be fully occupied by the end of 2018.”
Chief executive Ben Magara went even further, saying the rock drillers who were at the centre of the strike would only realise the R12 500 wage that their colleagues died for next year. However, he said Lonmin did not have enough money to fulfil its commitments, hence the R5 billion sale to Sibanye-Stillwater.
In a different world, this would be called talking with forked tongues and bargaining in bad faith as Lonmin has a dagger sharpened behind the workers’ backs. Besides the sale to Sibanye-Stillwater, Lonmin is planning to retrench at least 3 000 workers during the current financial year. By 2020, 12 600 jobs will be offloaded.
Nearby, Impala Platinum (Implats) has also flagged that it will let go of 13 000 jobs at its local mines in the next two years.
Now there is nothing wrong with any company embarking on a restructuring exercise to remain viable. It is one of the best ways to reposition in the face of a saturated market.
And US President Donald Trump has also not been kinder to mining companies. His anger against the world has pushed commodity prices down even further at a time when China’s appetite for commodities appears to have dampened.
This depressing global outlook is amplified locally by Statistics South Africa (Stats SA), which recently released data showing that the mining sector in South Africa fell 9.9 percent in the first quarter largely as a result of lower gold, platinum group metals and iron ore production.
South African mines, which used to yield output way above any other country in the world, now burn billions of rand each year because operations are simply not profitable and production costs are high.
No right-thinking shareholder would want to be associated with such losses.
But the decision to use such a tragic event for cheap PR is – even by Lonmin’s own standards – disingenuous.
Squalid conditions
Marikana has not changed much since the massacre in 2012.
The workers, who give the mine its heartbeat, still live in squalid conditions. Some have even dumped Ngcwembe’s falling houses for shacks. They prefer to use his so-called living allowance to care for their families in the Eastern Cape and North West.
The Benchmark Foundation calls this corporate irresponsibility.
Like the rest of the mining houses in South Africa, Lonmin has continued to operate using the same methods it did when the industry was at its height.
There has never been any forward thinking about what to do when conditions in the market change.
In mining countries such as Australia, companies have worked with the government on joint initiatives to ensure that safety, distinctive geology, and research make the sector attractive to investors.
So successful have the joint ventures been that Australia today exports technology that is able to predict production patterns, processes and cost efficiencies at shift level. The companies have also invested heavily in the human resource capital.
They have made sure that their workers understand what is expected of them and buy into a common vision.
They see workers as key stakeholders that need to be respected if the value chain is to continue without much hassle.
Such co-operations have not only repositioned the industry, they have also led to improved output at a lesser risk to life.
That is why South Africa’s mining industry, which has already recorded staggering fatalities this year, needs to change its ways to remain relevant.
The change needs to involve the mindsets and attitudes that retrenchments are the only way out of tough times.
They must stop seeing themselves as just business, but more as responsible corporate citizens.
The widening unemployment is not only bad for the those who are without jobs, it is equally bad for stability.
Very few investors have the stomach to withstand instability, however attractive the end result may be. Options beyond just cutting overhead expenses should be thoroughly explored for the benefit of the mines, employees and the country. Workers need to be taken into confidence on the financial performance of the operations.
Openness and honesty go a long way to cementing relationships.
The easiest way of demonstrating that they can also be trusted is to discard themselves of the notion that executive bonuses remain sacrosanct even during difficult times.
And that restructuring is not about retrenchments. It can be about diversification.
That way, the deep-rooted mistrust between the industry and the mineworkers can be addressed. And those left behind will know that their comrades did not die for nothing.