14 December 2012

South Africa: The Meaning of Marikana


What lay at the heart of the Marikana strike? And what are the implications for the ANC's Mangaung conference?

South Africa's ruling party, the African National Congress (ANC), will meet in Mangaung next week in an atmosphere very different to that of the run-up to Polokwane in 2007, the ANC's last electoral conference. 2012 has been an important year, aside from the ANC's bitter internal disputes. Most significantly, this year the country saw its most explosive wave of strikes since the end of apartheid, with miners at its core.

The massacre by police of 34 Lonmin platinum workers at a mine in Marikana has been the most publicised aspect of the recent turmoil, and the event highlighted how many features of the apartheid system have not been so much preserved as reproduced. The strikes also threw the labour movement into acute crisis, as many members of the National Union of Mineworkers (NUM) resoundingly rejected the union's politically powerful but industrially conservative leadership. Some even joined the Association of Mineworkers and Construction Union (AMCU), a rival union formed in 1998. Furthermore, most notably at Lonmin and elsewhere, workers sought to negotiate with employers directly rather than through union representatives.

South Africa's mineral wealth

These events have also drawn attention to the enduring scale and importance of South Africa's mineral wealth. In April 2010, a Citigroup report identified South Africa as the world's richest country in terms of its mineral reserves, valued at $2.5 trillion. Platinum group metals (PGMs) constitute $2.3 trillion of this and are located in the Bushveld Igneous Complex (BIC) geological formation, an area which also contains the world's largest chromium and vanadium reserves, and which spreads across Gauteng, the North West and Limpopo provinces.

South Africa is estimated to hold 87% of the world's reserves of PGMs, and accounted for 76% of world platinum production in 2009. Since the early 1990s, platinum has been the fastest growing and most dynamic sub-sector within the mining industry, driven by soaring prices due to a surge in demand for catalytic converters and luxury jewellery. As a consequence, the BIC area has seen the fastest growth of any South African region over the past decade, with growth exceeding 15% in some years. And the area has also absorbed a significant proportion of public sector expenditure through, for example, the provision of water, electricity, transport and logistics infrastructure.

Over the same period, there has been significant corporate restructuring of firms involved in platinum. The sector is dominated by Anglo American Platinum and Impala Platinum, two transnational corporations that also dominated the sector during apartheid (together with Lonmin, the third largest platinum producer). These firms have successfully converted their old-order mining rights, and have managed to retain control over a large part of BIC platinum production by entering into joint-venture partnerships with emerging domestic black capitalist interests. The latter were beneficiaries of the Minerals and Petroleum Resources Development Act (MPRDA) through which the state effectively nationalised privately-held mineral rights.

At the same time, the post-apartheid state has been subject to pressure by emerging black capital to give it more economic space, much as the National Party were doing for Afrikaner capitalists half a century ago. A larger proportion of merger and acquisition activity in South Africa has, however, been financed by the country's financial sector.

Existing black communities, which owned BIC mineral rights under apartheid-era legislation, have also acquired ownership stakes in the old and new mines. The Bafokeng, for example, own a significant share of Impala Platinum and have listed their assets, Royal Bafokeng Holdings, on the Johannesburg Stock Exchange. The joint ventures with emerging black capital tend to shoulder a disproportionate share of the risks, often being the first to reduce output so as not to further depress commodity prices. The scale and pace of growth has also increased the sector's systemic dependence on bringing in labour from neighbouring regions.

Against this backdrop, our analysis suggests that there are four key issues which lie at the heart of the Marikana strike.

The Three Fs

The first is the systemic nature of South Africa's extractive economy, highlighted by the notion of the Minerals-Energy Complex (MEC). This term can refer to the core set of heavy industry along with the powerful vested interests and institutions that have evolved around mineral extraction and processing. It can also denote their interaction as a distinctive system of accumulation whose dynamics and linkages have determined South Africa's pattern of industrialisation.

Critical actors in the development of the MEC were the six mining houses or group producers that grew out of the mineral revolution in the late 19th century. These established the migrant labour system, fused with Afrikaner finance capital in the 1960s, and diversified out of the minerals and energy core, coming to dominate the entire economy by the 1970s. The concentration of both industrial and money capital in the MEC rested both on state support for key sectors (through giant parastatals and favourable tariff and pricing policies) and the extreme exploitation and national oppression of the black majority.

The political settlement of 1994 protected white capital despite demands for radical change from parts of the liberation movement. The power of MEC interests overwhelmingly influenced ANC policy from 1996, as a result of which capital and exchange controls were reduced and conglomerates were allowed to move their primary listings abroad.

The conglomerates combined this with intensive 'unbundling' at home, which involved selling their (less productive) assets to the aspirant black bourgeoisie. These developments have both reproduced and changed the MEC's determining influence across the economy. The foreign listings and unbundling of the big productive capitals have entailed a focus on their productive mining core and an emphasis on the internationalisation (and financialisation) of their operations.

Simultaneously, this unbundling has led to the emergence of distinctively financial corporate groupings with an increasing amount of domestic power. The post-apartheid economy could therefore be said to have been dominated by the 'three Fs': capital flight, finance and foreign ownership.

The evolution of the corporate structure governing platinum extraction reflects the post-apartheid economy's continuing prioritisation of mineral exporting over local beneficiation, the diversification of the economy, and greater employment generation. Platinum starkly exhibits the central features of South Africa's political economy: monopolistic industry structures, tight corporate control, and the cooption of the emerging interests of black capitalists (who appeared to support fully the aggressive response of the firms and the state to the Marikana strike).

Evidence presented to the Farlam Commission of Inquiry, the judicial commission set up to investigate the Marikana massacre, revealed the following demand made by Lonmin's senior management to government ministers: "The State should bring its might to bear on this crucial sector of the economy using resources at its disposal to resolutely bring the situation under control". Cyril Ramaphosa, a Lonmin executive, former General Secretary of the NUM, former Secretary General of the ANC and a nominee for the position of Deputy President of the ANC at Mangaung, also sent a string of emails to the government asking for help in quelling the riots in which he called the strikers "dastardly criminals" and demanded that "concomitant action" be taken.

Long way home

The second factor behind the Marikana strike is the structure of the century-old migrant labour system, which has not changed despite various reforms implemented over the past two decades. Currently, the majority of mineworkers in Marikana are migrant labourers from the Eastern Cape, Lesotho and Mozambique. Their live in dire conditions and with minimal rights; an annual work cycle only allows for breaks at Christmas and Easter.

The migrant labour system, as established by the mining houses at the end of the 19th century, entailed the devastation of the 'labour sending' areas - regions economically dependent on mineworkers' remittances. The Eastern Cape supplied labour to the gold mines of the Witwatersrand from the 1890s onwards, and the area remains today a 'labour sending' area as well as one of the poorest regions in the country. Particularly destitute are the villages of the former Transkei 'homeland' around Lusikisiki, Bizana and Flagstaff - the hometowns of many of the miners shot at Marikana. Many of these villages lack electricity, and family members saw the television footage of the shootings for the first time when they attended the hearings of the Farlam Commission of Inquiry. Measures to shorten the length of time between mineworkers' home visits, such as the building of airstrips, have not been taken.

One of the worst features of the apartheid migrant labour system was the state of the compounds in which mineworkers lived and which functioned as a key means of labour control. This policy of control has been abandoned by the mining companies, but not by the building of decent company houses. Instead, companies have introduced family accommodation schemes for those who live near to the mines in the form of a subsidy for a bond to purchase a house, while migrant workers are offered a cash allowance to 'live out'.

But many workers simply use this allowance to supplement their pay by living in the zinc shacks of the 'shack lands' that have sprung up all around the mines. The conditions there are appalling: outdoor toilets shared by 50 people, few taps, raw sewage leaking from pipes, and a lack of electricity, schools and clinics. It is estimated that 20-30% of mineworkers living in one such shanty town in the Rustenburg area are HIV positive.

The mining industry is also stuck to its apartheid past in its dependence on cheap labour. Lonmin workers were striking for a pay rise from around R4,000 ($450) to R12,500 ($1500) a month. Pay scales are complex, particularly as labour brokers (formally banned under apartheid) now hire one third of the mining workforce. In addition, mechanisation of the industry has been limited with rock drillers using tools that have been widespread in the industry since the 1930s.

Industry consultant and former National Union of Metalworkers of South Africa Gavin Hartford argues that the migrant labour system "has remained unaltered post-apartheid; that the specific migratory and housing conditions of migrants have led to a double economic burden; that the collective bargaining processes and institutions failed dismally to hear the signs of discontent and address the causes; that the company leadership in HR [human resources] and the line management functions is complicit in this failure; and that the solutions require a radical re-think of the future of migrant labour, of collective bargaining, of the manager/employee interface at shaft and mine level."

The Lonmin strike was prompted by a unilateral pay increase imposed by management in November 2011 for certain grades of workers. This increase did not extend to the rock-drill operators.

Widening the gap

The third issue exposed by the Marikana strike is the lack of adequate and coordinated planning for the development of such a large and important part of South Africa. Haphazard and unplanned development of the built environment has been rampant. This comes at a time when the largest municipality in the BIC appears to have collapsed completely. Last year the auditor-general was unable to complete its audit of Rustenburg (one of the fastest growing parts of South Africa). In the previous five years, Rustenburg received five successive qualified audits; but this year, auditors were unable to express an opinion on the municipality's accounts.

Marikana illustrates the appalling living conditions in the mines. This indicates that the social and labour plans executed under the Mineral and Petroleum Resources Development Act have been ineffective - a symptom of the government's failure to enforce its own policies.

The fourth issue here is the growing level of debt, and the ways in which finance is reinforcing social inequality. The growth of the microlending sector has been phenomenal in recent years, despite legislation (such as the Usury Act) aimed at protecting the poor. According to the National Credit Regulator, South Africa's debt sits at R1.3 trillion ($150 billion), of which almost 10% is unsecured credit. Moneyweb estimates that, for South Africans earning between R3,500 ($400) and R10,000 ($1200) a month, as much as 40% of their income goes toward covering loan repayments. Both Moneyweb and the Mail & Guardian have reported recently on how mining communities are becoming increasingly indebted as a result of unsecured loans advanced by cash-loan shops.

Moneyweb found instances where miners had been charged more than ten times their outstanding loan amount in legal fees. One platinum miner repaid R11,690 ($1,350) on a R1,000 ($115) loan; another miner was charged more than R20,000 ($2300) for the repayment of a R1,000 loan. The Daily Maverick quoted a Lonmin rock drill operator in Marikana as saying, "It's easy to get a cash loan if you work on the mines. They just check your pay slip from the previous month."

There are at least 13 microlenders in Marikana, but they are not all small-scale. One of the biggest players is Ubank, which boasts 500,000 customers (60% of whom work in the mining industry), and is owned jointly by the National Union of Mineworkers and the South African Chamber of Mines. South Africa's large and sophisticated financial sector refuses to lend to former homeland areas because of the existence of communal property rights. But at the same time, the richest 0.1% of the population now holds 27% of individual wealth in the form of equities, bonds, cash and deposits, real estate, and other assets.

A week before Mangaung, 33 business leaders, including Lonmin, signed a letter complaining about the lack of government action; but not one of them has addressed the deeper issue of inequality, whether in their own companies or more widely.

The low point

It is too early to predict the lasting effects of this crisis. The current discourse centres on the Farlam Commission of Inquiry. From our perspective, while it is important for the events surrounding the Marikana massacre to be clarified, the focus of public attention should be broadened to examine the root systemic causes outlined above. Sadly, it does not appear likely that this will emerge from the inquiry's deliberations.

Marikana epitomises the MEC of today, reflecting both the economic and social failings of post-apartheid development, and the fragmentation, oppression and eruption of dissent to which it has led.

But the continuing power and determining role of the MEC and white monopoly capital; the virtually unconditional support given to it by the ANC and its new black elite; the persistence of migrant labour; the pay, working and living conditions of mineworkers; and the complicity of sections of the labour movement in all of the above, have already forced many to ask how the liberation movement could have sunk so low, and how it can raise itself once more.

Samantha Ashman is a post-doctoral research fellow at the University of Johannesburg, visiting researcher at the Centre for Development Policy Research at SOAS, University of London, and a corresponding editor for the journal Historical Materialism.  Ben Fine is a professor of economics at the School of Oriental and Africa Studies (SOAS), University of London.

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