Platinum producers can afford to pay – Study

 

Windhoek – South Africa’s platinum producers, who have for the past four months been grappling with a crippling strike by more than 70 000 miners, can certainly afford to pay the R12 500 minimum wages which the stoical workers are demanding.

Platinum mines owned by the world’s top three producers of the metal, Anglo American Plc, Lonmin Plc and Impala Platinum have faced one of the most dogged strikes in the country’s mining sector ever.

Workers have downed tools since January 23 and vowed never to return to work until their demands of a minimum R12 500 per month, from R4 500 currently, are met. It is the strike which has cut an estimated 40 percent of world supply of the metal, which is used as a catalyst in controlling noxious emissions from vehicle engines and in the jewellery industry.

The workers are led by the Association of Mineworkers and Construction Union (AMCU), an upstart union which has upstaged the National Union of Mineworkers, a union allied to the ruling ANC government, in the platinum belt.

The fact that mining companies were highly profitable during the minerals commodities boom between 2000 and 2008 means that they can afford the wages being demanded by the striking workers, a research study by University of Manchester and University of London researchers, Andrew Bowman and Gilad Isaacs, respectively, has revealed.

Platinum mining companies have enjoyed a period of super profits spanning more than a decade when prices of the metal rose to more than US$2 100 an ounce in mid-2008 from US$350 an ounce in 1999.

“Platinum shareholders have done extremely well over the last 14 years in comparison to labour. Combined with continued poor living conditions on the platinum belt, anger over low wages and large pay differentials between workers and management has acted as a catalyst for increased labour militancy,” the researchers say.

During 2000 and 2008, the researchers say, workers in the platinum mining companies received 29 percent of valued added produced whilst 61 percent of value produced went to profits and 28 percent was distributed to shareholders. They cite an example of Impala Platinum, which allocated R47.7 million to shareholders during the period and R43.5m to workers. At Anglo unit, Amplats, workers took home during the eight years R91.4m while shareholders gained R91.1m. Lonmim distributed R25 million to shareholders during the eight years while R34.4m went to workers.

“These trends show prioritisation of shareholder value maximisation, which dictates that costs are minimised (especially labour costs) and that no cash lies idle so that gains can be distributed to shareholders either in the form of dividends or via companies buying back their own shares.

“This prioritisation of shareholder returns comes at the cost of both labour and long term investment strategies and is a key facet of financialisation.

“Related to this is the tendency for a substantial portion of executive remuneration to take place through share options, or bonuses based on share performance, which means that executives have a direct stake in short term shareholder value maximisation,” the researchers argue.

“It is against this backdrop of super profits, from which labour – and indeed the South African public more broadly – gained too little, that the strikers’ wage demands must be viewed.”

Mining companies have bled more than R21 billion in lost revenue and the workers have forgone more than R9 billion in wages during the ongoing strike.

The ruling ANC is blaming unnamed ‘foreign forces’ for stoking the strike with the intention of destabilising the country’s economy, analysts say that the tenacity of the workers is driven purely by the yawning salaries gap.

A government instituted commission of inquiry into the deaths by police shooting of 34 striking miners in Marikana in 2012 is yet to conclude its work.

“There is no reason why gains during a commodities boom should predominantly benefit mining executives and shareholders,” the researchers said.

“What the strike throws into sharp relief is the need for both improved wages and conditions…mining sector must be made to play ball.”

June 2014
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