Strike opens window to fix problems at mines
Poor socioeconomic conditions may keep fuelling instability in the platinum sector, writes Allan Seccombe
THE protracted platinum strike and talks involving labour, companies and the government, have created a rare and precious opportunity to make changes to a sector which has been wracked by conflict for the past three years. The tensions have been costly for all involved.
The violent protests and unprotected strikes that marked 2012, culminating in the killing of 44 people — 34 shot dead by police during a protest — has its roots in part in the complicated and often fraught relationships platinum mining companies have historically had and still have with their workforces, neighbouring communities, areas from which migrant workers come, and the government.
The instability in the platinum sector was fuelled by the poor social and economic conditions in which workers, their families and communities around mines have found themselves, with deep poverty, lack of infrastructure and indebtedness all playing their part, says labour analyst Gavin Hartford.
Until the mining companies, the government and organised labour get together to address these conditions there will be continued instability, he says. There have to be firm targets of what is required and “consequence management” to ensure parties deliver on their commitments.
Anglo American Platinum (Amplats), Lonmin and Impala Platinum (Implats), the world’s three biggest producers, estimate they have lost R24bn in revenue to the strike, which had stripped a million ounces or more from combined production.
Employees, they reckon, have forfeited R10.7bn in wages in the five-month strike, the longest in SA’s history, and one which has had negative consequences far beyond just the mining companies and their workers, with suppliers, contractors and local businesses taking tremendous losses too.
“Despite the devastation of the strike, it has forced the three companies into one room, it brought Amcu (Association of Mineworkers and Construction Union) and various government departments into that same room talking about the same challenges,” says Implats group executive for corporate relations Johan Theron.
“It would be a complete loss to SA if we all went back to our own boxes and built our own sandcastles again. Somehow we have to maintain this level of connectivity and work together to advance broader issues outside of each of our own narrow issues.
“There’s a real risk now that the crisis has been resolved that we go back to normal operations instead of the new normal,” he says.
Included in the three wage-agreement documents was a clause stipulating the formation of a task team at each of the companies, comprising members of the respective firms and Amcu to “investigate solutions towards the resolution” of nine points: shareholding; debts incurred with microlenders and garnishee orders — the first priority; a job-grading review; medical aid; medical separation agreements; a retrenchment/severance policy; retirement benefits and funeral cover; subcontracting, labour hire and employment agencies; and life skills centres.
The task teams must finalise their recommendations by endJune 2015 for the implementation of solutions, but these can, if there are financial implications, only be implemented at the end of the wage deal which expires at the end of June 2016.
Interestingly, there is no discussion point around productivity, an
It would be a complete loss to SA if we all went back to our own boxes and built our own sandcastles again
area of concern for the companies which are mining deeper and further away from the shaft, meaning workers spend less time mining and more time travelling underground, and in some cases mining more of a reef called UG2, which brings in less revenue than the highly prized Merensky Reef.
An existing “prestrike forum” addressing productivity and profitability of shafts will remain an important point of focus, says Mr Theron. “The forum will be reworked, I’m sure, along the lines of the new task teams and will start by looking at the new business plan from July 2014 and production build-up after the strike.”
The task teams will set the terms of reference for working groups on the nine points within 30 days of the signed wage deal. It’s not clear if other unions, such as the National Union of Mineworkers, the secondlargest union in the Rustenburg area, would be included in this work and what role the government may play, but the companies are keen to have these teams as broadly representative as possible.
Amplats CEO Chris Griffith says it is not unusual to have nonwage items with financial effects put before task teams as part of the settlement.
“We are not unhappy with a number of points that have been put down in the agreement. Some of them we’ve been trying to get the new union to talk about for a long time,” he says, adding that companies cannot be expected to take over responsibilities from the government, which has far larger resources to tackle infrastructure, transport and housing problems.
Amplats, for example, has taken on garnishee orders, using a service provider to clean out illegal and unscrupulous orders.
“The service providers behind them, we’ll take some of those guys on,” Mr Griffith says. It is also working on a scheme to build 20,000 houses with local and provincial governments.
Instead of companies working individually with Amcu to seek solutions to the nine points, potentially duplicating a lot of work, it would be better in some cases to work more closely together to find an industry solution.
The problem, Mr Theron says, is the Chamber of Mines has no role to play, given the shift in the industry’s representative body to a lobbying and advocacy body rather than marshalling resources as in
Trust is something that we need to build on, but surely we met some milestones during these wage negotiations
the past to lead these types of discussion on behalf of its members.
In the past, the companies have worked largely separately on social, community and labour projects. “The way that the companies were held accountable for our social and labour plans meant you had to do your projects alone and because we were held accountable it wasn’t really conducive to working together. It’s something we’ve discussed with the Department of Mineral Resources. We haven’t really cracked it yet,” Mr Griffith said.
“We are not averse to working together and we’ve got to find ways to do more of that to have a bigger impact,” he says.
Mineral Resources Minister Ngoako Ramatlhodi said earlier this month the government would accelerate the delivery of houses in Rustenburg.
The share option schemes for workers that most companies have used have resulted in confusion or unhappiness since the plans gave little to no meaningful financial benefit to workers.
Among other options that could be considered is the adoption of a South American scheme of paying a percentage of annual bottom line profits to the workforce, meaning windfall profits would be realised in the same year and relieve companies of the need to continually replace expired share option schemes that form part of their black economic empowerment equity ownership plans.
The problem with this scheme is it does not translate into the equity ownership requirement under the Mining Charter and would have to be negotiated with the Department of Mineral Resources. The charter, which has set a 26% ownership target for the end of this year, could be reviewed by Mr Ramatlhodi and his team and this will be a good time to discuss these kinds of options, Mr Theron says.
Another option would be to give employees shares so that they participate like any other shareholder in dividend flows, giving them a greater sense of ownership of the companies and potentially avoiding crippling strikes.
The strike ended on June 24, with parties signing a wage increase agreement far from the R12,500-a-month basic wage for entry level employees. But it allowed Amcu to claim victory, not only for the quantum of increase but for changing the wage structure, which means the lowest-paid workers will get R8,450 in the third year of the agreement.
“Amcu is committed to utilising all lawful methods to ensure that the minimum wage of R12,500 will be reached by no later than 2017,” the union’s president, Joseph Mathunjwa, says.
Amcu wants all parties to “start on a new leaf of industrial relations underscored by the co-operation, unity and productivity for the benefit of everyone concerned”, he says. “Trust is something we need to build on but surely we met some milestones during these wage negotiations.”
Asked about productivity talks with the companies, which have not been part of the wage agreement, he says there is nothing stopping them from talking to Amcu about the matter.
It’s against this backdrop that the three companies and Amcu, a powerful newcomer to the platinum sector, have to forge a new working relationship and thrash out solutions to the nine key problems that have contributed to the bedevilled relationships between the companies and labour.
“I’m not so sure the engagement over the past five months has been only negative for relationships with Amcu. Of course, a five-month strike is not designed to build relationships. There will have to be a lot of effort from all parties going forward to get onto a better footing and to get to a place where we don’t have another five-month strike,” says Mr Griffith.
“In many cases there were dialogues setting the foundation for much better relationships.”