The Mining Juggernaut and the Monopoly of Power

The concept of structural shortcomings in the South African economy has been thrown about with great abandon over the last two decades, but has gained significant traction in the last couple of years as a passing premise, primarily because of the difficulty for business, government and labour to find an accommodating economic policy that would keep as many of the countries stakeholders comfortable, with workers off the streets and capital in the market.

The structural premise of our current struggle to create a fair and equal society, is however not just a “throw away” comment designed to make the conversation appear more intelligent. In fact, the failure to rigorously interrogate this premise, has robbed us of the prescience which comes with a sound understanding of South Africa’s structural legacy.

Our history is not pretty, and in fact it is downright painful. So it is with some justification that some may argue that the past is best left in the past. But like a festering sore that keeps imposing itself from the inside out, it screams out for release from its puss-filled and inflamed underbelly causing its host to heat up with fever, convulse and scream in pain and desperation. That our country displays these symptoms is beyond even those who peddle the “business as usual” mantra. Everyone is agreed that South Africa is in need of a solution.

 Despite this grim picture presented by mining houses, the mining sector is an enormously profitable one. South Africa’s total reserves remain some of the world’s most valuable, with an estimated worth of R20.3-trillion ($2.5-trillion) according to a City Bank report. Overall, the country is estimated to have the world’s fifth-largest mining sector in terms of GDP value. The Price Waterhouse Coopers (PWC) 2012 report for trends in the mining industry, in which it tracks the financial results of 39 mining companies with a primary listing on the Johannesburg Stock Exchange (JSE), as well as those with a secondary listing whose main operations are in Africa, and which included companies with a market capitalization of more than R200 million at the end of June 2012, claims that mining operations in these companies achieved an increased Net Profit of 25% over 2011, totaling R65 Billion for the period. These mining Companies increased shareholder dividends from 12% of value created in 2011 to 18% in 2012 The distribution to shareholders more than doubled from the prior year. From 17 billion in 2011 to 36 billion in 2012 or by 116% in Rand terms, while employee share of the value created by the companies decreased from 29% in 2011 to 28% in 2012.

Solvency and liquidity ratios remained strong in the sector, meaning no companies went bankrupt and with enough reserves to ensure a sustainable future. This is a significant achievement considering the rate at which companies are failing in the other sectors of the economy, indicating, that somehow the mining sector, while clearly under pressure, remains almost immune to the unfolding drama around it. Borrowings in the mining sector remained at virtually zero. Extraction-related industries are a key driver of the Johannesburg Stock Exchange, representing 42%, or R1.9-trillion.

This financial strength provides the industry with the financial might to hold aloft, like the proverbial sword of Damocles, the almost god like ability to bless you or damn you. Imbuing it with “free will”, to operate and, invest when and how it deems fit. This is no ordinary complex we are dealing with. All stakeholders in mining with the exception of Shareholders and management are taking a smaller piece of the pie, including government who received 16% in taxes for 2012 against 18% in 2011. Mining companies are determined to hold onto and increase their exorbitant returns and have proceeded to assert its dominance, even though it is all too keenly aware that it dares not flaunt its god like status, less the mortals should rise up. Government rests uneasily against a rock and a hard place, or rather, like Damocles, who upon swopping places on the throne with Dionysius, realizes that even though he sits on the throne, the king still holds the sword.

Truth be told, the government has abandoned its most powerful weapon in the historical battle between the Mining Complex and the indigenous population of South Africa opting instead for deployment of a patriotic bourgeois into the boardrooms of Mining Houses and the accumulation of ownership by individuals such as Cyril Ramaphosa.. During the period pre, and to some extent post, 1994, with communities and workers highly organized and militant, the mining sector had finally met a force that could provide a counter balance, forcing Capital in general but mining in particular to seek an alternative roadmap. They abandoned the National Party, and instead reached an accommodation with the ANC.

The Cosatu unions and particularly NUM, have long abandoned any idea of structural economic change in the mining sector, bar of course ownership, participating actively in investment activities, knowing full well that ownership, within its current structural makeup, will not make an iota difference to the daily lived experiences of the workers and communities affected by mining.

Subsequent to the negotiated settlement with capital, communities were demobilized and told to sit back and wait for the pot of gold at the end of the rainbow. The more communities demobilized, the more the mining sector increased its reach and influence over society and the governing political formations in particular. The mining Sector was able to successfully limit the scope and reach of the MPRDA by excluding historically disposed communities and did not allow communities to have a say about mining on their land. This was a gross injustice and betrayal of the promises made to miners and mining affected communities, pre 1994. The continual onslaught of the mining juggernaut has swept away local opposition, which continues to grow in intensity and scope, continuing to exploit and degrade both our land and our people.

If our society has any hope of ever changing the ongoing exploitation of our land, communities and people, it has to act in unison. The myriad of community based orginisations and NPO`s in the sector such as ActionAid, Benchmarks and LAMOSA must move beyond their Silo`s to create an alternative voice. The mining houses must be presented with a counter balance to their unfettered power. Government is not able to present a counterweight to the Mining Houses for fear of capital disinvestment and its continued ownership ambitions. Communities, however, through collective action, are able to once again take their destiny into their own hands.

Now more than ever, it is time to put aside our ideological differences, to focus on the providing a clear alternative to the extreme exploitation of our land and people. It is time for communities to unite around a single movement that would be able to challenge the mining complex and insist on a new dispensation. Governments and big capital are forced to listen when society unites in an undeniable expression of their will. For it is our silence and disconnected action that grants legitimacy to the continued acidification of our land and the exploitation of its people.