Interview with Gavin Capps on Platinum

by Sep 13, 2012Magazine

interview-with-gavin-cappsAmandla (A!): Is platinum the new gold for the South African economy and how has the global crisis impacted on the industry?

GC: Platinum has historically been a relatively marginal metal in the world economy. South Africa has 88 percent of the world’s known reserves but until the 1990s there was comparatively little demand for it.

Since the late 1990s there has been an incredible turnaround in the global platinum market due to the use of platinum in catalytic converters for car exhaust emission systems. Increased demand resulted from good marketing by the major producers in the white-metal jewellery market, in a number of manufacturing applications, and it could explode if fuel-cell electricity technology becomes viable.

From the 1990s until the financial crisis of 2008, there was a massive surge in platinum’s price. Consequently, in South Africa there was a huge expansion of the industry in North West and Limpopo, . Platinum overtook gold as the biggest employer of mine labour and as mining’s biggest component, also year-on-year in sales value. It has emerged as the most dynamic element of SA’s post-apartheid minerals energy complex. In that sense, platinum has become absolutely the new ‘gold’.

What this is leading to is that the ANC, after taking some time to develop its mineral policy, set in motion a process of opening the industry to BEE players, especially the platinum sector. The key measure was the Mineral and Petroleum Resources Development Act (MPRDA) of 2002, which essentially nationalised all privately-held mineral rights. This gave it considerable leverage to propel black mining entrepreneurs into platinum. It is largely through this process that Tokyo Sexwale, Patrice Motsepe and Cyril Ramaphosa established themselves in the industry.

With the Zuma administration’s turn towards a minerals-led industrialisation strategy, platinum was recognised as central to our mining future. It is also in this context that discussions of a resources’ rent tax have emerged.

Part of this strategy focuses on downstream industrialisation or beneficiation as a means of enhancing the economy. Government wishes to see more local manufacturing of catalytic converters and a technological push to develop fuel-cell technology. If it takes off in the automobile industry to the point where it replaces the internal combustion engine, it is no exaggeration to say platinum could be to SA what oil is to the Middle East.

All of this points to the critical strategic importance of platinum to the state’s future economic calculations, especially since it may become central to future energy production. This is an important aspect of the backdrop to Marikana.

The second element is the platinum sector’s short-term crisis. The impact of the global economic crisis on the car market, especially in Europe where demand is very low, pushed the platinum price downwards, placing a tight profit squeeze on the industry.

In this situation of over-supply, platinum producers have attempted to slow down production. Some of the smaller ones have even shut down. Others wait for prices to increase to resume their projects. This means that workers are paying for the current crisis: when mines are shut down, workers are laid off. In the depth of the financial crisis Angloplats laid off 19 800 workers.

We should also understand that new foreign players have entered the industry. China has come in through a partnership with Sizwe in the North West, Canadian and Australian companies are also moving in. So there is a lot of jockeying for position. This creates even more pressure in an industry facing profitability and cost squeezes.

A!: While it is one thing to recognise the strategic importance of platinum to the economy, is it fair to say that the government is in bed with the platinum mine owners?

GC: This is a complex question: in some ways they are and in others they’re not. When the ANC introduced the MRPDA as a means of sourcing BEE players, there was an almighty fight with the mining houses, which were terrified of losing their monopoly rights. The tension was resolved through compromises and back-room deals that allowed producers to retain their position while letting in new players, particularly those aligned to the ANC.

There are differences within the ANC on how to relate to the platinum industry. The departments of mineral resources (DMR) and economic development (DED), have different approaches. The DED supports the State Intervention in the Mineral Sector (SIMS), which focuses on large scale beneficiation and means that more of the manufacturing should take place in South Africa. The DMR is close to the mining houses and will do as little as possible to undermine their profitability. For example, Minister Susan Shabangu is opposed to the resources rent tax, which is supported by others at a ministerial level. It is not monolithic. Essentially, the government works its best to create spaces for junior partners and to use the industry as a catalyst for other parts of the economy.

A!: Why have we seen militant worker struggles in an industry that is experiencing a slow-down?

GC: There have been various worker struggles in the platinum fields since 1994, with wild-cat strikes developing outside of the National Union of Mineworker’s (NUM’s) control. These were unprotected strikes led by workers themselves, leaving NUM to catch up. NUM has had to reassert itself as the main bargaining power between labour and capital. The current struggles haven’t come out of nowhere. To understand the present it is necessary to look back historically at worker organisation in the platinum industry.

One of the biggest recognition struggles fought by NUM was at Impala’s platinum mines in 1992/3, which was important because it showsed the strength of worker initiative and the tradition of rank-and-file organisation. Impala operated in the Bophuthatswana Bantustan, where any attempt to organise mineworkers was ruthlessly crushed. Incredible state violence was used. (As an aside this is why the North West is so well geared up to crush strikes: it has the institutional capacity and knowledge to do so.)

Worker leaders from that period explained that before the Implats strikes, which involved stoppages by 40 000 workers, they had patiently built up rank-and-file organisation clandestinely. As a result of these massive stoppages and processes of self-organisation, Implats, desperate to restore stability, signed a recognition agreement with NUM.

So we should take account of this strong history of worker initiative on the mines. It is extraordinary that struggles have developed outside the NUM apparatus again, only a couple of years following this battle. The bureaucratisation of NUM, on one hand, and its loss of control over the workforce, on the other, are truly surprising.

One reason could be miners’ incredibly harsh working conditions. It is no surprise to see a concentration of rock drill operators in the militant actions because their work conditions are simply appalling and the pay is very poor.

Even though wage levels have increased incrementally since 1994, compared with the rate of the expansion of the industry and the profits being made these increases are comparatively small.

A!: What has happened with NUM? It seems workers have rejected NUM to strike independently and join the rival union, AMCU.

GC: When I did field research in the industry in 2000/2001 in the Bafokeng area, I was struck by the degree of alienation of ordinary workers. In a relatively short time they had started feeling that NUM no longer represented them effectively. This could be attributed to three factors:

  • After NUM’s recognition struggles, the bosses employed various strategies to develop closer relations with the local union leadership. They realized that union incorporation was better with a force like NUM rather than facing autonomous worker action with which one cannot negotiate and reach compromises. For example, at Impala, the union office is right next to the manager’s office. Management fostered strategies of socialising with NUM leaders (both organisers and senior shop-stewards) and this generated a feeling among workers that grievances were not being taken up.
  • NUM’s structures were not built from the bottom up. NUM would often arrive after the outbreak of a struggle, organise big rallies and hand out membership forms.
  • NUM’s immense role in the tripartite alliance and at NEDLAC shows that it wholly embraced corporatism and the social contract model. NUM accepts that capital, state and labour are equal stakeholders in the industry and that arrangements can be obtained around the table. However, once agreed to, these arrangements have to be enforced by all parties, including NUM.

It would be wrong to say that NUM is part of the problem because of these reasons. NUM’s importance for mineworkers is undeniable and one would want NUM workers to take on these contradictions and find common cause with other unions to defend worker interests.

A!: We have seen the formation of AMCU from disgruntled NUM members. What is AMCU’s history?

GC: AMCU was established on the coal mines in Witbank, formed by shop-stewards who would not accept a particular NUM deal. There was a very militant struggle at that colliery, including underground occupations. NUM then disciplined these workers, even though its own investigation found no members had broken union rules. Direct intervention by Gwede Mantashe, who was NUM general secretary at the time, saw this group of members being expelled.

I don’t believe that AMCU is an opportunist operation in the way that others have been. Precisely because of the distrust between the rank and file and the leadership, workers have been relatively open to other union formations that seem like they will represent their grievances more effectively.

There have been a number of opportunistic initiatives to take advantage of the distrust between workers and the NUM leadership. One was an outfit called Workers’ Mouthpiece, whose intervention in a strike led to a number of workers being killed. It transpired that Workers’ Mouthpiece was a scam run by whites wanting to get their hands on union dues.

There have been several of these opportunistic interventions. They happen frequently to exploit that gap between workers and the leadership.

In general, AMCU appears to be a lot closer to workers on the ground. However, it’s not sufficient to cheer AMCU from the sidelines. I understand AMCU as the expression of the extreme bureaucratisation of NUM, on one hand, and the extreme exploitation of the workforce, on the other. It grew because of its stronger grassroots orientation and relative success. At Impala, for example, workers won a substantial pay rise after six weeks of struggle at the end of 2011, where 17 200 workers were sacked then rehired.

It is necessary to spend more time on the ground to be able to understand how far AMCU is moving in and able to exploit worker grievances, and how far it is growing more organically. To put it into perspective we should remember this is how NUM itself grew.

The problem with AMCU/NUM rivalry is that it allows management to develop divide and rule tactics. The great historic achievement of NUM was that it unified the workforce behind one union. And you could take the position that AMCU is having the effect that hard-won union recognition agreements (and they were hard won, costing many workers lives) are beginning to be ripped up. So, for example, the CCMA has come in at Impala to adjudicate NUM and AMCU’s percentages of trade union membership. If NUM’s membership falls below 51 percent, then all its existing recognition agreements will be torn up.

One could argue, if you saw this in isolation, that it’s an incredible step backwards, threatening important rights and gains achieved in the mining sector. And it’s certainly not in workers’ interests to be involved in turf wars over membership.

So this is a serious dilemma, but one that is explained by the problems around NUM. AMCU does reflect a new kind of militancy and, if it is giving that an organised expression, another argument could be that AMCU’s emergence is a positive development.

It will be incredibly complex and difficult to work out the best way forward from here. In the abstract we would argue for worker unity but there’s no guarantee that this will happen. What we also see in Marikana and elsewhere is worker initiatives happening outside of both NUM and AMCU. This makes things even more complex.

Gavin Capps is a member of the Land Reform and Democracy Unit at the University of Cape Town and is affiliated with the Department of Sociology. He is the leading academic expert on the platinum industry.

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