MAC: Mines and Communities

South Africa: between a rock and hard places?

Published by MAC on 2011-02-14
Source: Reuters (2011-02-04)

"As long as we are alive, we will pursue Angloplat to get what is owed to us".

So declares Esther Moloto who, with fellow villagers, is waging war against the world's biggest platinum mining company, a subsidiary of London-listed Anglo American.

Her impassioned comment follows shortly after the Bengwenyama-ye-Maswazi community, successfully sued another miner in the country's platinum belt for encroaching on its territory. See: London Calling hails a community victory in South Africa

However, according to the article below, it's not just poor black South Africans who are feeling a "squeeze".

The mining industry itself - the platinum sector included - is stagnating. Each year between 2000 and 2008, it actually contracted by 1 percent in dollar terms.

Analysis: South African mining in decline?

Ed Cropley and Agnieszka Flak

Reuters

4 February 2011

SEKHUKHUNE, South Africa - For Esther Moloto, the 32-year-old owner of a little house on top of the world's biggest platinum reserves, the sound of progress is falling plaster.

"Before the mine came there were no cracks. Now there's blasting every day and they are everywhere," she says, pointing to a kitchen wall riven with fissures that she blames on underground explosions from the nearby Twickenham mine, owned by Anglo Platinum, the world's biggest platinum company.

Moloto wants repairs and compensation -- the blasting, she says, has even driven cobras into her yard from the rocky hillside behind her home. She vows in a manner typical of many South Africans to keep fighting against the unfairness of the system.

"As long as we are alive, we will pursue Angloplat to get what is owed to us," she says, standing arms crossed on the cracked concrete verandah of her home.

Sekhukhune, a densely populated valley 250 km (160 miles) northeast of Johannesburg and famous for its platinum-rich bedrock, has a history of injustice. During apartheid, impoverished blacks were uprooted to make way for white-owned citrus farms. Now, thanks to its platinum -- a metal used in some of the world's most sought-after technologies, including 'clean' cars -- villagers are going through a similar process to make way for mines.

Moloto's is one of seven households in a tiny village taking on Anglo Platinum, a $27 billion mining firm armed with seismic studies, teams of lawyers and assurances that local communities are "key stakeholders". In the South Africa of old, hers might have been a straightforward hard-luck story. Nowadays, things aren't so simple.

In November, in what may prove a landmark ruling, the country's highest court ruled in favour of a different group of villagers who had objected to a platinum company with prospecting rights on their land.

That decision was the latest in a series of shifts -- legal, government and social -- designed to redress past injustices against South Africa's black majority. Perhaps no industry more feels the heat than mining, which is still dominated by whites and still brings in billions of dollars a year.

South Africa has the world's largest gold reserves and 90 percent of its platinum, but the days when its mining houses ruled the roost are fading. While commodity prices have boomed over the past decade, mining investment in the world's fifth-biggest mining economy has stagnated and the sector is shrinking.

Poor power supplies and infrastructure have long been a problem; of growing concern is the political climate, which now includes radical elements in the ruling African National Congress (ANC) calling for outright nationalisation of mining firms.

"At first glance, South Africa should be well-placed to take advantage of high commodity prices," said Kevin Lings, an economist at Johannesburg-based fund manager Stanlib. "But the power, the infrastructure and the policy -- when you sit around a boardroom table looking at project proposals, those are big issues."

Golden Age

Part of the slide is the natural consequence of age.

For a glimpse of the past wealth and power of South African mining -- not to mention its inequality -- head for downtown Johannesburg, a city of towering brownstones built literally on gold and the sweat of artificially cheap black labour during 120 years of white domination.

At its heart sits the imposing Rand Club, built at the end of the 19th century as a watering-hole for early "Rand Lords" such as De Beers founder Cecil Rhodes, who is said to have played billiards with diamonds in its cavernous cellars. Over the years, its bar and reading room served as the de facto seat of power. With the advent of democratic rule in 1994, though, it lost its clout at a stroke and mining became an industry for the benefit all South Africans, not just the privileged few.

The decline has continued below ground, too: Johannesburg's gold fields, the source of 40 percent of all the gold ever mined, run ever thinner and deeper. Over the last decade, output has shrunk by more than 7 percent a year, a faster decline than other mature producers such as Australia, the United States and Canada, and the trend is accelerating.

Even though South Africa is still believed to have 47,000 tonnes of gold reserves, or a global share of 12.8 percent, according to the U.S. Geological Survey, the one-time champion has slipped to third in production behind China and Australia.

That should not be a problem for a country which still has the good fortune to sit atop the world's most valuable mineral deposits. According to a study last year by U.S. investment bank Citi, South Africa's extant non-energy mineral wealth is $2.5 trillion -- comfortably more than Russia and Australia, with around $1.6 trillion apiece.

Of these reserves, by far the most valuable is platinum, the precious metal used in gadgets such as catalytic converters and hard-disc drives, as well as jewellery. The Citi report valued the platinum deposits at nearly $2.3 trillion, reflecting the pre-eminence of a metal that now fetches $1,800 an ounce, nearly 30 percent more than gold.

Yet South Africa's platinum sector has grown by just 4 percent a year since 1990. That's not enough to fill the void left by declining gold production. Overall in the commodities boom that prevailed from 2000-2008, South Africa's mining industry contracted by 1 percent every year in dollar terms, according to consultancy Global Insight. Meanwhile, mining in China grew at 19 percent a year, Russia 10 percent and Indonesia 8 percent.

With mining accounting for 8 percent of South African gross domestic product and 500,000 jobs last year, the statistics make grim reading for a government saddled with 25 percent unemployment.

Powering Down

Infrastructure and power supply are both big problems. The rail network cannot get enough ore to the ocean, and the power grid struggles to meet demand. After decades of offering cheap electricity to attract investment, state utility Eskom has run out of cash to build new power stations, and prices are having to rise fast to plug the funding gap.

Home | About Us | Companies | Countries | Minerals | Contact Us
© Mines and Communities 2013. Web site by Zippy Info