Unsustainable ‘best in class’ Lonmin: destined for breakdowns | by Amandla! editorial staff

by Nov 13, 2013Magazine

Only one week before the massacre in Marikana on 16 August last year, Bench Marks Foundation published its report, ‘Policy Gap 6’. It was a part of a long series of critical studies of SA mining. It described in detail the social and environmental havoc created by Amplats, Impala and Lonmin, the three biggest platinum mining companies in SA. Lonmin responded arrogantly that the company’s yearly ‘Sustainable Development Report’ (SDR) provide a rebuttal to the findings of Bench Marks.

Fair enough. Bench Marks has come back with ‘Policy Gap 7’, commissioned to AIDC political economy researchers, this time using Lonmin’s own reports to expose how Lonmin violates the legal limits for emissions of sulphur dioxide and dust. Lonmin also breaks commitments to build houses and uses contract workers to achieve higher profits, especially when the profit crisis sets in from 2008. In addition, Lonmin time and again shuffles the cards and numbers, trying to ‘be clever’. The intent is obviously to fool a casual reader about the true state of affairs in the ‘Greater Lonmin Community’ (GLC).

Failed housing plans for 12 years

Lonmin hasn’t built one single free-standing house since 1999, despite repeated commitments and plans, adopted under the Mining Charter. This and other facts are hidden in a cloud of details. It has to be pulled out from the wordy texts like a rotten tooth from the back of the mouth of a patient with dentist phobia.

Why this failure to build houses? Six thousand houses, promised in 2006 to be ready in 2011, is cut to ‘5 500 houses by 2011’. In 2012 this goal, and obligation, is tacitly cut down to 4 351 houses to be ready in 2014. Lonmin now suddenly takes the 1 149 houses built in 1999 into account when trying to meet the legal obligation under the Charter. The problem seems to be, suggests the Bench Marks study, that the workers don’t want to or cannot buy houses, and then the plans are scrapped for reasons of Lonmin’s economic priorities. Too few workers can envision bringing families from the Eastern Cape and elsewhere to the polluted, unsafe and depressing neighbourhoods of Lonmin mining. And should a worker dare to take a house loan, the house will be lost to the bank in case of a strike or retrenchment. As a result of this stalemate, zero houses were built during the whole period 2000–2012.

As for the single-sex hostels, Lonmin has failed a promise to get rid of them by 2011 and replace them with decent housing facilities. There remain 49 hostels in 2012, says Lonmin. But it is difficult to be sure. The numbers Lonmin reports change and don’t make sense over time. Even more important is that 80 beds in a mining hostel don’t become 80 beds in the new dwelling ‘units’, but between 20 and 30. Remaining workers are displaced and move to the growing informal settlements. It is an ‘unsustainable process’, concludes the Bench Marks study. This means: If it goes on like this, a social and political breaking point is inevitable.

Cheaper contract workers

Twenty to 25 out of every 100 workers at Lonmin have ‘temporary contracts’ during the period under study. They do the same job as others. But if a permanent worker gets paid, say, R6 000 per month, a contract worker earns less than R4 000 for the same job, or about 60% of the permanent worker wage on the average. During the global crisis of 2008–2009 Lonmin increased its contract worker share to 33 out of 100 workers to protect profits.

Some labour-force data are derived from the SDRs and some are taken from the Department of Mineral Resources (DMR). But there is no accurate reporting of contract worker numbers and their wages. This is in breach of the legislation. Lonmin, Impala and Angloplats are worst, says a statistician at the DMR to Amandla! They use hundreds of labour broker firms. They can’t keep or don’t want to keep or report a correct record.

Directors can’t complain

From 2003 to 2012, about R6 billion was paid out as work-free income to Lonmin shareholders (‘dividends’). Between nine and twelve ‘directors’ get about the same amount of money in salaries and packages as spending on the mandatory ‘Social Labour Plans’ (SLPs) every year, aimed at uplifting the situation among 85 000 residents in the GLC. From 2003 to 2009 the amounts paid to the dozens of directors were even higher than ‘Social Capital’ spending. But also here something is wrong with the numbers. The SDRs of 2003 to 2007 report that between R25 and R50 million was spent on ‘Social Capital’ every year, mostly to the Lonmin Community Trust Fund, which was rapidly closed down in 2007. But later SDRs reporting back to 2006 say that the data is not ‘available’ or ‘applicable’ in relation to ‘local economic development projects’ and ‘approved SLP projects’ for earlier years.

During the good times for Lonmin shareholders, up until 2009, about 30% of the total new income from the Lonmin mining accrued to wages, or R30 out of every R100. In times when production decreases, the wage share increases to 70%. The same pattern holds for Impala and Angloplats.

In contrast, the wage share in platinum has been very low and stable since 2020, averaging 30%, according to StatsSA. There is a jungle of small platinum mining companies in South Africa. It is at Angloplats, Impala and Lonmin where the workers started the big strikes, not at companies only hiring a thousand workers or less.

Pollution rules

On average, the SDRs report 90% compliance with the permit for dust pollution every year. No sanctions are reported. Eight years out of ten, Lonmin exceeds the permits for Sulphur dioxide (SO2) emissions. No sanctions are reported and the pollution permit has been increased two times, from a daily limit of 4.8 tons in 2003 to 17.9 tons in 2012. One of the important questions raised by Bench Marks concerns the supervising authority. How does Lonmin negotiate its constant transgressions and failures? Lonmin is running an unsustainable project, concludes the report. If Lonmin win ‘sustainability’ prices at business gatherings, then platinum mining in South Africa is not environmentally, socially or politically sustainable.

‘Profit crisis’

In the Bench Marks study that issue is raised as a discussion about what to do with big companies that break the law, always get away with the authorities and are dangerous to the surrounding communities and to the environment. This issue can also be brought in from another angle.

After the 1990s, platinum mining expanded and became extremely profitable. When the crisis sets in 2008, profits fall. This prompted cuts in Lonmin’s mandatory social labour plans in breach of the Charter. It also triggered retrenchment plans at Anglo American Platinum (AAP). A key to understanding the retrenchments at Angloplats, even if they are now reduced, was an announcement by Anglo American CEO in July to the business community. He would increase the return on investment from 11 to 15 % per year. Anglo American owns 80% of the shares in Angloplats. The fight against the retrenchment at Angloplats now stands out as a half victory. The numbers were brought down. But a concession to capitalist business logic in principle remains. There is today a ‘profit crisis’ in the platinum industry. But in general, the companies are not making losses. They are just making smaller profits than before.

For-non-profit platinum mining

What if we cannot expect more from profit-maximising platinum mining? What if they will never pay decent wages and abide by the legal limits for pollution? What if their mandatory social labour plans always will be underfunded and postponed because they are ‘too expensive right now’? What if platinum mining in South Africa has to be for-non-profit projects that don’t maximise profits’ ‘shareholder value’ but maximise social benefits to society? What if taking care of the environment means to go slow, mechanise the work underground and provide thousands of jobs at every mine just to deal with protection and rehabilitation of water, land and health?

Such a holistic economic turn would increase the price of the platinum metal steeply. The much higher price would reflect the true cost of platinum production to society, and this would have consequences for private car industry. Private cars would be even more expensive, and public transport, buses and trains would stand out as even more economic. The discussion about ‘profitability’ contra social and environmental ‘sustainability” should be at the core of the nationalisation debate.

Breaking state complicity in crime

But the Bench Marks report also highlights that the DMR and other authorities don’t do their job. ‘It is not clear what a mining company must do to lose its license,’ say the authors, but they don’t try to answer why this is so.

One good guess is that interest in profit-maximising mining in the state itself, in local and central government and political leadership, is a major problem. State officials and political leaders of the highest stature are deeply involved in the mining business. They are hurt too if mining licenses are withdrawn. In addition, every private mining license lost would pose the question of the state taking over the project and it would sabotage the grand BEE project of ANC: to build a black bourgeoisie.

This involvement by the state officials in mining, and complicity in law breaking, makes the nationalisation issue so difficult today. Can the existing South African state run a mine as a go-slow, steady-income social project? This has been a reason for progressives adding ‘under control of the mining communities’ to the well-known socialist slogan of ‘worker control’.

It is easy to say, but not so easy to do. Mining communities challenging law-breakers and their passive friends in the state is perhaps where to start. Bench Marks’ latest report provides a tool in such an endeavour.

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