‘stalling ex­er­cise’

Finweek English Edition - - COMPANIES & INVESTMENTS - David Mckay

An agree­ment signed last week at an emer­gency sum­mit in­volv­ing Govern­ment, the min­ing i ndustr y and it s unions that re­vis­ited pro­pos­als to im­prove labour re­la­tions on the coun­try’s mines, as well as en­sure sus­tain­able op­er­a­tions, has been met with a fair de­gree of skep­ti­cism from an­a­lysts.

The widely com­mu­ni­cated crit­i­cism is that of Peter At­tard Mon­talto, chief strate­gist for No­mura In­ter­na­tional, who said the pact “the fruits of deputy pres­i­dent Kgalema Mot­lanthe’s in­ter­ven­tion in the min­ing in­dus­try at the be­hest of Pres­i­dent Ja­cob Zuma” was merely a pre­elec­tion pal­lia­tive.

“Over­all we think Govern­ment is still in what can be said to be largely a stalling ex­er­cise to hold the sit­u­a­tion down un­til af­ter the elec­tion,” At­tard Mon­talto said in a note on 14 June of the sum­mit doc­u­ment, ti­tled The Frame­work Agree­ment for a Sus­tain­able Min­ing In­dus­try.

He be­lieved that once National Elec­tions were com­plete, the min­ing in­dus­try, and the plat­inum sec­tor in par­tic­u­lar, would face “sig­nif­i­cant re­struc­tur­ing and job losses in our view”.

It’s a view sup­ported by CIBC Cap­i­tal Mar­kets an­a­lyst, Leon Ester­huizen.

“The gen­eral view seems to be that the cur­rent un­holy al­liance be­tween labour and Govern­ment will run much colder once gen­eral elec­tions in May 2014 have passed. This view es­sen­tially im­plies a sig­nif­i­cant level of ‘scratch my back and I’ll scratch yours’ be­tween labour and the Govern­ment,” Ester­huizen said in a note dated 3 June.

He also drew a com­par­i­son be­tween the 50 lives lost in the re­cent spate of plat­inum in­dus­try vi­o­lence with its de­clin­ing prof­itabil­ity and a sim­i­lar and per­ma­nent in­dus­trial de­cline in the gold sec­tor dur­ing the early Nineties in which some 80 min­ers’ lives were lost amid mine vi­o­lence.

“So here we are back with plat­inum, an­other of those once-in-a-life­time op­por­tu­ni­ties for SA,” said Ester­huizen. “The coun­try has the op­por­tu­nity to save it, but runs the risk to de­stroy it,” he said of ev­er­in­creas­ing de­mands by unions for higher salaries even though about 65% of the in­dus­try was loss-mak­ing prior to the de­te­ri­o­ra­tion of the rand/dol­lar ex­change rate

Mot­lanthe’s doc­u­ment, how­ever, doesn’t seem quite the ‘ band-aid on the gap­ing wound’ that some crit­i­cism would have us be­lieve. Not en­tirely.

For in­stance, it mean­ing­fully takes up the cud­gels of Lon­min’s in­sis­tence (and that of for­mer Im­pala Plat­inum CEO, David Brown), that “ma­jori­tar­i­an­ism” favoured by labour or­gan­i­sa­tions in the past now re­quires qual­i­fi­ca­tions to pro­vide for a more di­verse labour re­la­tions en­vi­ron­ment.

Lon­min has of­fered the As­so­ci­ated Minework­ers & Con­struc­tion Union (AMCU) the same recog­ni­tion rights af­forded to the pre­vi­ous ma­jor­ity union at its mine, the National Union of Minework­ers (NUM) over lower-paid worker cat­e­gories, but has de­clined to give it rep­re­sen­ta­tional rights over other cat­e­gories where AMCU is not dom­i­nant.

Ac­cord­ing to the Frame­work Agree­ment for a Sus­tain­able Min­ing In­dus­try, Govern­ment said it would work with busi­ness and labour to “ex­plore var­i­ous in­stru­ments to ad­dress any pos­si­ble un­in­tended con­sti­tu­tional con­se­quences in the ap­pli­ca­tion of the ma­jori­tar­ian prin­ci­ple”. This would in­clude “in­tro­duc­ing an in­stru­ment in law”, it said.

Of course, leg­is­lat­ing a new labour dis­pen­sa­tion im­plies a long-term out­come where short-term i nter ven­tions are re­quired.

The par­tic­i­pants of the sum­mit last week in­clude AMCU, which now has un­til 26 June to as­sess the im­port of the doc­u­ment. It will be an im­por­tant step for­ward if it em­braces it. “I think the deputy pres­i­dent has tried his best to bring the par­ties to­gether,” said Mike Teke, deputy pres­i­dent of the Cham­ber of Mines of SA. He didn’t think it was a “f luffy doc­u­ment” as some have ob­served.

“And I think that when Mathun­jwa [ Joseph, pres­i­dent of AMCU] comes back with the doc­u­ment it will be signed,” said Teke.

But it will take more than a piece of pa­per to re­pair SA’s labour re­la­tions on the mines. Even as the sum­mit mem­bers were shak­ing hands on a work­ing doc­u­ment, min­ers at An­glo Amer­i­can Plat­inum were barred from ex­it­ing one of the com­pany’s shafts amid claims of un­fair AMCU mem­ber dis­missals.

Kgalema Mot­lanthe

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