A call in S. Africa to nationalize mines
Struggling companies have trouble paying workers, but analysts doubt that the state could do any better.
When Nelson Mandela’s grandson and Jacob Zuma’s nephew took over the insolvent Grootvlei gold mine, east of Johannesburg, the workers thought they, and the mine, were saved.
But things have only gotten worse for the workers, most of whom have been on strike since March over a portion of their wages that they said had not been paid since December 2008.
Zondwa Mandela, grandson of the country’s first black president, Nelson Mandela, and Khulubuse Zuma, nephew of the current president, are executives of Aurora Empowerment Systems, a private black empowerment company, which took over the mine about a year ago.
Most workers think the only thing that can now salvage their livelihood, even if it has no effect on their back pay, is nationalization.
Government involvement in business was a key component of the African National Congress party’s 1955 blueprint for uplifting the black masses. But it’s not been up for serious debate since Nelson Mandela abandoned the policy in 1992 at the World Economic Forum in Davos, Switzerland, two years before his election as president.
Nationalization has regained traction in recent months because of the failure of the government of President Zuma to deliver jobs and basic services, such as healthcare and education, to millions of shackdwelling black South Africans.
Its loudest proponent is the populist leader of the ANC Youth League, Julius Malema, who went to Venezuela to study President Hugo Chavez’s nationalization drive and came back a convert, believing ownership of South Africa’s resources would create a massive budget infusion that could be directed to improving the lives of the poor.
The ANC-led government has ignored the calls of the Youth League and the Congress of South African Trade Unions for a radical leftward shift.
But Jacob Zuma’s political weakness, after his reliance on the unions and the Youth League to win the ANC leadership in 2007, has led to severe factional infighting, analysts say, with his erstwhile allies threatening to withdraw support unless they have more say over the economy.
“Zuma has been promising different groups different things,” said political analyst William Gumede of the University of the Witwatersrand.
“In that situation, you can’t do anything and there’s paralysis and a vacuum. People are using the vacuum to get control of the ANC, but if you’re going to get control, you’ve got to appear more populist than everybody else,” Gumede said. “That’s why you’re getting these populist calls for nationalization from people like the ANCYL,” the ANC Youth League.
The dry windblown flats east of Johannesburg, pim-
pled by enormous clay slag heaps, were long among the richest gold areas in the country. But then the metal began to run out and companies were forced to dig deeper and deeper, making the costs, and dangers, soar, all for diminishing profits.
The Grootvlei mine has an air of rusted despair, like some ex-Soviet industrial relic in Siberia. Miners live in barrack-like hostels, without water, power or functioning toilets.
They gather for a union meeting on a chilly morning, but there’s no good news about the back pay they are seeking in their strike.
There’s not much leverage these days. Rather, there’s anger among workers who feel that the ANC elite has abandoned them and that the government has not delivered on promises to create jobs. The official unemployment rate is 25%, but it’s more than 40% if those who have given up looking are included.
A miner at Grootvlei mine, Headman Capu, 40, arrived in Johannesburg looking for work in 1989, doing odd jobs until he was employed in the mine 10 years ago.
“I like Malema because he’s the one who is talking about taking the mines under the government. I want that to happen in mines like Aurora because I’m on contract. I’m not a permanent worker. We don’t get benefits. We don’t have medical aid. I’ve got no pension.
“We want the mine to belong to the government because the government will pay pensions.”
Capu is disillusioned
‘The time when you need capital is precisely the time when the government does not have it because there’s a downturn.’
— Gavin Keeton,
economics analyst at Rhodes University
about Black Economic Empowerment, the policy the ANC adopted when it came to power in 1994. It’s supposed to shift the economy out of white hands, giving blacks equity and positions in management. He’s also angry that he can’t feed his family or find another job.
“They promised us jobs, but we lost jobs. In so many mines, they retrenched people.”
But the very problem that caused the mine’s failure and the retrenchments in the industry — the global economic crisis — would also make it difficult for the state to operate mines, analysts say.
Gavin Keeton, an economics analyst at Rhodes University, said the government would have to borrow at least $120 million to buy South Africa’s mines.
“There’s a financial problem and that’s that the mining industry is a cyclical industry and when there’s a downturn, mining companies turn to their shareholders for capital,” Keeton said.
“The problem is that the time when you need capital is precisely the time when the government does not have it because there’s a downturn. That’s one reason state mining companies have not been successful in other countries.”
The congress of trade unions is pushing for land seizures, price regulation, export and import taxes and a tax to cap the earnings of the richest 10%.
“We do want a state that can play a more direct role in all the areas we think are strategic on the economy,” Zwelinzima Vavi, head of the congress of unions, said at a recent news conference, brushing off concerns that nationalization would scare off investors.
“If everything we do had to be approved by investors then we would be stuck in the current situation for 100 years or more,” Vavi said.
The trade unions congress is part of the governing alliance with the ANC and Communist Party and has grown increasingly frustrated with the government’s refusal to take its views into account.
At the ANC’s policy conference last week in Durban, Zuma managed to postpone the nationalization debate until 2012, when the main conference on policy and leadership elections are to be held. But analysts said this will only drag out the uncertainty.
“The ANC have been unable to manage all the different factions. There’s no cohesion, no discipline,” Gumede said.
“In the run-up to 2012, the Youth League is going to say they won’t support anyone for the leadership unless they agree to nationalization. The battle of rhetoric around nationalization is going to continue until 2012, and it will create more uncertainty.”