As South Africa struggles to come to terms with emerging news that a massacre took place at Marikana, the government has been quick in its attempt to contain body blows to both brand South Africa and investor confidence off the back of these events. Rising mine worker militancy may need to see the state’s spin doctoring go into overdrive.
Trade and industry minister Rob Davies put on his best tap shoes and jetted off to London to speak to investors there. The message Davies is putting out is that the militancy is contained, and that foreign investor inflow has not been disturbed.
In London, Davies told alarmed foreign investors that platinum mines were making millions while workers were living in “appalling” conditions. He added that mine owners had questions to answer, and said the government would focus on how companies treated their employees.
However, the minister omitted to disclose that Cyril Ramaphosa, a powerful member of the ruling party, has a company which holds shares in Lonmin; nor did Davies volunteer information about the mining and prospecting rights held by Chancellor House, the ANC’s fundraising and investment arm.
But the political tap dancing wasn’t limited to Davies. On Monday 02 September – the same day that the first 162 Marikana miners of 270 were freed – the Inter-Ministerial Committee on the Marikana tragedy (government doesn’t call it a massacre) met with members of the foreign press.
“The tragic incident at Marikana is not a reflection of the business environment in South Africa,” Minister in the Presidency, Collins Chabane, told the Foreign Correspondents’ Association. He was reading from a carefully worded statement on behalf of his Inter-Ministerial cohorts.
“We would like to reassure all stakeholders and the international community that mining operations continue unhindered in other parts of the North West province and throughout the country. Government remains in control of the situation, and law and order continues to prevail. The country continues to fully support direct investment and appropriate incentives, and the legislative framework is in place to give confidence and predictability to investment decisions and security of tenure.”
What wasn’t in place was that pesky former ANC Youth League leader Julius Malema, who now keeps turning up at troubled mines – much to the chagrin of the government and owners of mining capital, but to the delight of embattled miners. Earlier Malema told striking workers at Gold One’s Grootvlei mine: “Leaders of the National Union of Mineworkers (NUM) should know that you can’t act for workers without consulting them, and don’t take workers for granted. If they fail you, you must lead yourself.”
Asked whether politics was becoming hazardous to business in South Africa, economist Mike Schussler told Daily Maverick that it wasn’t politics per se, but rather a certain politician that was causing consternation. “Mr Malema is actually destroying jobs for black people. I would say it as simply as that. I would say that the majority of people working in mines and in manufacturing, and in South Africa, are black. Out of the total 13,2 million jobs locally 1,9 million are white, while the rest are black or DTI black which means black, coloureds and Indians,” Schussler said. “So about 11 million people, including employers and employees, are black,” he added. Schussler says if Malema has his way with nationalisation, those who are employed and contributing to pension schemes would be badly hurt.
“There are nine million people who are either on pension or contributing to a pension fund or a retirement annuity in South Africa at present, more or less. It is mostly the formal sector. Those pension funds, where are they invested? In that main Johannesburg Stock Exchange, right? Also in government bonds. If that goes wrong, most workers in South Africa would lose their savings or a large part of their savings,” the economist said.
“Even the miners have pension funds and even the rock drillers. If those mines are nationalised without compensation – they will eat Julius Malema’s balls. And you can quote me on that.”
Schussler believes nationalisation sounds fine and well until such time as people start losing their own money, and the pain of the loss of precious life savings would see people turn their anger at the architects and promoters of nationalisation.
But what about the effect Marikana has had on investor confidence? “If you look at it, whatever your colour is, are you going to put more money into South Africa now? I doubt it. Whatever your nationality is, the answer is no. Perhaps if you have a security services company, or an auctioneering company or a debt recovery company the answer would be yes, but for the most part the answer now would be no. But you wouldn’t be investing if you were in industries like the mining or manufacturing industries,” said Schussler.
This directly contradicted Chabane’s earlier-mentioned script read at the Foreign Correspondents’ Association, which optimistically claimed: “The events of the past weeks have not yet impacted on our ability to attract investors to our country. We have also not had any concerns raised through our foreign offices abroad about the damage done to investor sentiments. Government through the DTI has facilitated several investments in the past weeks in Mining, Manufacturing, and Business Process Outsourcing (BPO).”
Asked what kind of effect Marikana will have on our economy, Schussler answered: “You can measure GDP in three ways. Firstly you can measure it in terms of how we spend. On the spending side it is exports minus imports, and because 70% of our exports are commodities from mining sites, that plays a big role.”
“On the production side mining is only 4%, but the issue is the added value figures. Much of what mining buys is manufacturing or value added services like accountants, marketers, wholesalers, or whatever the case may be. The problem is that the knock-on effect of mining is very big and that is where the problem comes in. This comes at a time when commodity prices for us are low, imported commodities like oil are high, so it is going to have an impact on everything that we do,” Schussler added.
“The third thing is input labour costs, in other words what does labour cost you, what does electricity cost you, an all those other things. At this point in time Marikana isn’t buying electricity, for example. The combined physical effect is going to be one or two percent of GDP. Now that doesn’t sound that big, but the biggest effect it is going to have is in the indirect, which is going to be investor confidence.”
Schussler believes the Marikana effect builds an invisible path, but that the effects of this are tangible. “The effect is very real if investor confidence is dented, and this includes domestic investors, because domestic investors are the biggest. Would you invest your money right now in Rustenburg if someone told you about a great opportunity in Marikana?”
The answer? You don’t need to be a brain surgeon to get it. DM
Photos by Greg Marinovich.
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