Ever since a roving digger stumbled across a gold bearing reef on a highveld ridge known as the Witwatersrand, South Africa’s rich gold deposits have indelibly shaped and influenced its history.
The first and most significant historical event as a result of that discovery was surely the Anglo-Boer war. Britain, desperate to control South Africa’s newfound mineral wealth, provoked a war expecting it to be over within a few short months. It turned out to be one of the bloodiest (and humiliating) conflicts they would ever encounter.
The legacy of hatred and bitterness incited by the Anglo-Boer war and its cruel aftermath stimulated a toxic and destructive Afrikaner nationalism that eventually took hold of the country, with repercussions lasting almost a century.
Throughout this period, gold provided an underpin to the nation’s economy. It contributed handsomely to tax coffers and generated valuable foreign revenue. What followed was spectacular wealth for a few and employment for thousands of desperate, marginalised people under despicable conditions at a very low wage.
Consistently producing more than two-thirds of the world’s gold, over 32-million ounces, 1970 saw the industry at its prime. South Africa continued to hold top spot in terms of world production until the turn of the century.
Since the end of apartheid, the ANC-led government has made great strides in improving the lives of the average mine worker. Despite these efforts, which were not only necessary but overdue, it has sadly watched in despair as gold production began a progressively downward slide. Frustratingly, this too culminated in an ever-increasing metals prices market, of which the country saw no benefit.
Now producing less than China, Australia, the United States and even Russia, South Africa’s gold industry has steadily decreased since the 1970’s peak. The incontrovertible truth is SA is facing complete gold resource depletion and the country’s history is again set to be influenced, without doubt negatively.
The established mines are old, mostly getting deeper and ever susceptible to temporary shutdown due to safety concerns. It is universally acknowledged that mining takes place in a dangerous environment, therefore it is imperative that safety becomes second nature. Deep mines mean steeply rising input costs. New operations are either small by comparison or of low grade.
In the face of this resource depletion, the industry has also fallen victim to a number of inhibiting factors – all of which are the responsibility of government, and could otherwise have been avoided.
Quite simply, government has failed in its duty to nurture the industry that continues to employ thousands of people – and the many more that depend on them for a decent living. Informal research indicates that up to seven people are directly supported by every South African miner.
Whilst its intentions may have been noble, government’s stringent requirements on the industry have placed management under pressure to comply with excessive bureaucracy in the form of biased labour legislation.
The result is that rather than focusing on operations, management is often locked in protracted wage negotiations with labour, their hands tied by the fact that the very same labour is increasingly unproductive. There is a high prevalence of silicosis, tuberculosis and HIV/Aids in mines across SA.
The industry has suffered crippling strikes – the damage not only confined to the number of days lost to no production. The knock-on effects are significant.
SA remains the least accommodating gold mining regime in the world – the marginal tax rate for gold miners is considerably higher than in other countries. It is just baffling. Eskom’s ongoing difficulties in the provision of sufficient power contribute to the industry’s woes. The parastatal’s inability to provide pricing guidance is hampering feasibility studies and is nothing short of a full-blown crisis – it is contributing to the shelving of new projects.
The mines are currently able to meet the imposed shortfall targets by moving shifts to lower peak demand times and putting new and expansion projects on hold. Working without full power makes a sizeable dent in the earning capacity of the mines and has a direct impact on the mineworkers who face possible retrenchment.
Why on earth would investors sink vast amounts of capital into new or expansion projects if government is perceived to be charging them a kings ransom, only at the same time unable to assure them of basic services?
Government can only ignore these realities for so long. It is solely responsible for fostering an environment that encourages foreign direct investment.
Investors are furthermore concerned by the ongoing and internationally publicised demands by certain influences within the ruling party for nationalisation of gold and other mining assets.
In South Africa, the past does matter. It explains the present. Gold, and the mining industry in general, continues to set the agenda – in this case, the political. But for how much longer? Gold’s significant 200-year influence on the Republic of South Africa is soon coming to end, some say within 30 years. What a sad day it shall be.
That needn’t be the case though if government quickly establishes a task team to attend to the matter. There are plenty of marginal operations that can be rescued from closure (and some, perhaps re-opened) if some form of tripartite agreement is reached between industry, government and labour.
It is now in the hands of the government to extend the lifetime of this industry and give it the support it needs. Together with labour unions, government needs to set aside short-term expediency to ensure long-term employment sustainability. If nothing else, for the sake of history. DM