Platinum drop fires social unrest

For decades, companies that extracted South African platinum promised to help improve the lives of the impoverished people living above their mines. Those communities are getting tired of waiting.

Demonstrations by residents – many living in shacks without running water – around mines have disrupted operations run by producers including Impala Platinum, Lonmin and African Rainbow Minerals. Protesters demand jobs and money, saying that investments outside of the mines haven’t been enough.

The latest clashes are heaping more pressure on a business already squeezed by prices that are about half what they were in 2010. Companies say they support local economic development but have limited scope to hire and invest until profits improve.

As platinum prices fell and industry costs rose over the past decade, dividends paid to local community trusts dried up and many pledges to improve living conditions went unfulfilled. Frustration is bubbling over in mining communities.

Other operations facing community pressure include Impala’s Marula mine; African Rainbow’s Modikwa mine in Mpumalanga; and Northam Platinum.

“We’re dealing with a fire,” said Mxolisi Mgojo, Chamber of Mines president. “It’s the cry of a need to be involved and participate in the economy.”

Lonmin estimates half its workforce lives in “substandard” conditions. It’s converted all its single-sex hostels into homes and has built 493 of a targeted 1 240 new apartments. It’s reviewing its housing strategy with unions and will complete it in mid-2017, said spokesperson Wendy Tlou.

So far, protests have had little real impact on platinum output or prices and global platinum supply is expected to exceed demand this year.

However, disruptions are inflating costs that may mean more cuts in output and jobs.

More than half the industry’s production is already losing money, according to Anglo American Platinum. –Bloomberg

We’re dealing with a fire. It’s the cry of a need to be involved and participate in the economy.

Mxolisi Mgojo President of the Chamber of Mines