Mining a new reality

26 June 2013

Ever since diamonds were discovered on the banks of the Orange River in 1867 mining has been at the heart of South Africa’s economic growth.

The subsequent discovery of gold in the Witwatersrand in 1886 was the catalyst for a mining boom that set South Africa on a path to prosperity and growth.

However, this growth did not come without cost, for over a century men have toiled beneath the earth to extract precious metals and minerals. Underground conditions are harsh; men often work at incredible depths and are plagued by extreme conditions and temperatures. Even with today’s technology the narrowness of South Africa’s inclined reefs and ore bodies tends to prevent mechanisation. Thus mining remains extremely labour intensive even today.

There is a saying that to discover who you truly are you sometimes need to reflect on the path you have travelled. Mining in South Africa has travelled a long and winding road, with many highs and lows. But even today more than a hundred years after mining began it still forms part of the lifeblood of our economy and society.

After last year’s tumultuous events in the mining industry many have said that mining in South Africa is at a crossroads. At the annual Mining Indaba in Cape Town which ran from 4 to 7 February 2013 the various role players in the industry grappled with vexing question of how to secure the future of mining in the country.

Despite the differences of opinion between government, labour and business, all were in agreement that a common path must be found to ensure the viability and sustainability of mining.  The industry remains one of the largest employers in South Africa, and for every direct job in mining, approximately two jobs are created in other sectors. Mining is also an important foreign exchange earner, with gold accounting for more than one-third of exports.

The general view of a declining mining sector is often at odds with the reality on the ground. The number of mines has increased from 993 in 2004 to almost 1 600 today, while associated revenue generated grew astronomically in nominal terms from R98 billion in 2004 to R370 billion by the end of 2011. In the same vein, employment in the mining industry grew from just under 449 000 in 2004 to marginally above 530 000 in June 2012.

 

Most people would equate mining with minerals such as gold or diamonds and more recently platinum. But fewer people are aware that mining is the industry that helps provide about 72 per cent of South Africa’s primary energy needs, and effectively “fuels” the South African economy.

In 2011, about 125 million tonnes of coal was used to generate 94 per cent of South Africa’s electricity effectively turning the wheels of industry and the economy. Also in 2011, about 45 million tonnes of coal was converted into liquid fuels, which accounted for about 30 per cent of the country’s liquid fuel production.

Mining without doubt is still a major force in driving the country’s economy. Speaking at the Mining Indaba the Minister of Mineral Resources, Susan Shabangu once again reaffirmed government’s commitment to the future of mining.

“I would like to affirm that our government is fully conscious of the reality that mineral development cannot happen unless capital is invested by the private sector. There is room for both private and public returns, indeed these are interdependent.

We will continue to ensure that an enabling environment is created, while at the same time developing an environment that is responsive to the changing global economic environment and the dynamism of the contemporary mining industry," she said.

Minister Shabangu also raised the issue of the historic disparities caused by oppression in apartheid South Africa. She emphasised that this year marks a hundred years since the enactment of the Native Land Act, which created a system of land tenure that deprived the majority of South Africans of the right to own land, and eventually compelled Africans who had lost their land to join the mining industry as migrant labourers.

“It is the remnants of this historical legacy of the migrant labour system, poor housing and living conditions, high levels of illiteracy, and low skills level that inevitably contributed to Marikana,” she said.

The spectre of Marikana and the subsequent wave of violent strikes across the mining industry continue to haunt the country. Fears of job losses in the mining industry this year have resurfaced following a proposed move by Anglo Platinum to dismiss thousands of workers. On 15 January the company announced that it would lay off 14,000 workers, but has since stalled the process after an intervention by government.

Ensuring that mining retains its place as a one of the primary drivers of the economy and a creator of jobs is a primary concern of government. Speaking at the Mining Indaba Minister Trevor Manuel, the Minister in the Presidency responsible for National Planning Commission said the mining needed to be positioned as a catalyst to drive other changes in the South African economy.

Without doubt mining faces what could potentially be a watershed year, there are many challenges and addressing them will be the shared responsibility of government, business and labour. A new ethos will have to emerge, every role player must begin to fully realise the vital role the other fulfils. Without partnership there can be no sustainable future.

Speaker after speaker at the Mining Indaba spoke of a need for tough and frank conversations between the government, private sector, workers and civil society. They expressed the hope that consensus can be found to deal with legacy issues in mining areas, and to reposition mining to be more inclusive and to still be sustainable.

There are many headwinds in the mining sector, but government remains strongly committed to finding solutions. We call on all role players to join us as we move forward, let us jointly continue the journey that began in 1867.

Phumla Williams is Acting CEO of the Government Communications and Information System (GCIS)