Three monuments in Johannesburg
Commemorating the importance of miners in the history and development of the country, the statue of Andile Msongelwa (2013) is a gift from the Chamber of Mines and a number of trade unions.
While the Witwatersrand goldfields were the largest hitherto discovered, the ore itself was low grade and deep underground and so difficult and expensive to mine. Profitable extraction thus came to depend on a combination of large-scale investment (to develop sufficient economies of scale) and vast supplies of cheap wage labour (to maximise the rate of exploitation). The first of these conditions was met through the rapid concentration of mine ownership (including coal mines) into the hands of six major producers whose interests were coordinated through the Chamber of Mines. These mining houses benefited from massive state support in key inputs – most notably energy, but also transport – to form what Ben Fine and Zav Rustomjee (1996) dubbed the ‘minerals-energy complex’ (MEC), which would revolve around close ties between the private and public sectors and generate a distinctive accumulation dynamic that profoundly shaped South Africa’s industrialisation during the 20th century.
For its part, gold’s ‘labour problem’ was progressively resolved in the critical period between 1890 (when deep-level mining began) and 1920 through the construction of an increasingly expansive and regulated system of (male) African migrant labour. This sourced black workers from across South Africa (mostly the Eastern Cape) and its neighbouring territories (above all, Mozambique and Lesotho) and, at the end of their contracts, returned them to rural homes where agriculture supported (or ‘subsidised’) their low wages and the reproduction of their labour power. At the mines, these labour migrants were subjected to harsh cost and work disciplines through the compound system and a stark division of labour in which semi-servile black work gangs executed the tasks set by a rigid hierarchy of white miners, supervisors and management. Meanwhile, in the rural areas, it was largely the subsistence labour of women that reproduced this distinctive worker-peasantry, both partially tied to and separated from the land.
Finally, the ‘mineral revolution’ set in motion a major set of changes at the level of the state. There were two major elements to this. First, British imperialism attempted to curtail and then completely destroy the independent power of the Afrikaner settler republics in order to gain control of the whole region. This culminated in the so-called Anglo-Boer War of 1899–1902, out of which was constructed a new, unified state (1910) firmly focused on the needs of the mining industry. Secondly, the remaining political independence of the African kingdoms within the region was decisively smashed, while a combination of accelerating land dispossession, coercive taxation and other discriminatory measures destroyed independent peasant agriculture and created new cash needs, leaving Africans with no choice but to enter wage employment at the mines and in white commercial agriculture and secondary industry.
JK Another key feature connected to mining and the migrant labour system was the Land Acts of 1913 and 1936 and the spatial division of South Africa between black and white in the segregation era (1910–1939).
GC Yes, the Land Acts eventually designated 87 per cent of the country for exclusive white occupation and use. This is largely where the most valuable minerals were located, where industrialisation took off and where the new urban centres developed. On the periphery of that, in the remaining 13 per cent, were the black rural areas, the so-called ‘native reserves’, which were desperately overcrowded and deeply impoverished and, as I have mentioned, where migrant labour was both produced and dumped when it was no longer needed. This also meant that there was a stark dualism, or ‘bifurcation’ in Mamdani’s term (1996), within the South African state. ‘White’ South Africa, as it increasingly becomes known, was characterised by Western-style private property regimes, full citizenship rights and all the other trappings of bourgeois democracy (though exclusively for ‘whites’). However, in ‘black’ South Africa, the rural reserves remained under ‘communal’ tenure and the local control of chiefs, constituting Africans as rightless subjects. And this spatio-racial divide would become really important in the platinum story.
JK And apartheid built up on this ...
GC The apartheid state, which came into existence in 1948, intensified the logic of the migrant labour system: increasing control over the movement of labour, installing new laws and means of oppressing black workers and strengthening the conditions of their super-exploitation. It also deepened the distinction between white South Africa and the black rural reserves, designating the latter as quasi-independent states or ‘homelands’. Part of the apartheid project was also to promote Afrikaner capital, which had historically been based in agriculture and finance. Now the state began to create the conditions for its integration with ‘English’ mining capital, creating larger and more complex conglomerate structures, which in turn interlocked with the giant parastatal companies at the heart of the MEC.
JK From a certain perspective, apartheid was not limited to South Africa, but the regime was heavily dependent on transnational enterprises not based in South Africa.
GC Yes, that’s right. The key moment here is the Sharpeville massacre in 1960, when Africans protesting against the imposition of the passes designed to control their movements were gunned down by the police. One of the effects of the Sharpeville massacre was to send a message to the rest of the world that South Africa was going to stand on the neck of black workers and guarantee the conditions for massive profit-making. And indeed, after Sharpeville, there was a dramatic rise in foreign direct investment into South Africa, above all from the United States and Britain but also from many other major capitalist states, including Germany. So, for capital, this becomes apartheid’s ‘golden age’.
JK Let’s shift now to the platinum industry and its origins and specifics.
GC Platinum was discovered in the 1920s, by which time the gold industry was already developed. However, these reserves would soon prove to be the largest in the world. Over 88 per cent of known platinum resources are concentrated in the northern part of South Africa in a vast, bowl-shaped geological formation called the Bushveld Complex. Yet, unlike gold, the uses for platinum were at this point very restricted and the industry only really began to take off in the 1960s and the 1970s as new applications were found. Critically, the Bushveld Complex itself primarily outcropped not in ‘white’ South Africa but in two of the fictively independent homeland states: Bophuthatswana (in what is now the North West and Gauteng Provinces) and Lebowa (now part of Limpopo). As such, the areas which had historically been designated as the areas of black labour supply would now become the centres of the new platinum industry, signalling the beginning of a shift in the spatial organisation of the mining sector as a whole.
JK What were the effects of the development of the platinum industry at the levels of capital, labour and the state?
GC The take-off of the platinum mining industry in the 1960s and 1970s exemplified a wider process of diversification within and out of the MEC core as the apartheid-era conglomerates began to move beyond the South African staples of gold, diamonds and coal (while still continuing to invest heavily in them) into ‘new’ minerals such as chrome and vanadium. This was reflected in the ownership structure of the platinum industry, which was dominated by three major companies: first, Rustenburg Platinum Mines, the number one producer and a subsidiary of the giant South African Anglo American Corporation; second, Impala Platinum, which was integrated into the Afrikaner mining house Gencor; and, third, Lonmin, which somewhat went against this pattern as the subsidiary of the British multinational Lonrho. Nevertheless, Lonrho itself was founded in 1909 as the London and Rhodesian Mining Company and thus had a southern African colonial origin in what is now Zimbabwe. Lonrho subsequently expanded its mining operations through Africa and, from the 1960s, moved into areas as diverse as newspapers, hotels, distribution and textiles to create a sprawling global empire under the leadership of Tiny Rowland (cf. Van Vuuren, 2017). This gave it an international reach that the South African conglomerates did not have, but it was no less embedded (and implicated) in the political economy of apartheid for that.
A crucial feature of the South African platinum industry from its inception was that all the producers faced a common problem: although the bulk of the world’s reserves were concentrated in the country, there was very limited and sporadic demand for the mineral globally. The big change came when new vehicle emissions legislation – the result of successful campaigning by the environmentalists – began to be implemented, first in California in the 1970s and subsequently throughout the West and now most of the world. This drove the use of catalytic converters in vehicle emissions systems, which use platinum as a non-substitutable element, leading to a steady growth in demand and thus the conditions for the newer South African producers – Impala and Lonmin – to enter a market which had been historically dominated by Anglo’s Rustenburg Platinum. However, here it’s also important to distinguish between the different platinum group metals – platinum, palladium, ruthenium, rhodium, osmium, iridium – which are mined together but in different ratios (depending on the geographical location of the reserves) and which have different applications. Thus while platinum, which is largely sourced from South Africa, is used in catalytic converters for diesel engines, palladium is more commonly used in emissions systems for petrol engines, favouring the smaller Russian industry, which exploits palladium-rich reserves. The massive promotion of the light diesel market in the United Kingdom and European Union during the 1990s – itself a (questionable) response to environmental pressure to reduce CO2 emissions – would drive an unprecedented boom in global platinum demand that transformed the South African industry. This we’ll come back to. But the main points here are that, first, the relative success of the environmental movement in the global North would paradoxically lead to the expansion of platinum production in the South and, second, that this is where companies that are involved in the fabrication of autocatalysts, like BASF, come into the picture.
Historically, fabricators and end users in the motor industry have acquired their platinum through forward-selling contracts with individual producers rather than through the open market. These guarantee the supply of a specified amount of platinum over a fixed time period – usually around five years – and within an agreed price range. The effect has been to lock the major producers and consumers – such as Impala, General Motors, Lonmin and BASF – into tight and enduring relationships along the supply chain, which also tend to act as a barrier to entry to other mining companies attempting to enter the platinum market. The monopolistic character of the South African platinum industry has been further intensified by the technical challenges of extracting the PGMs from the rock that has been mined. This entails a very complex, time-consuming and capital-intensive set of chemical operations with the effect that processing has been historically dominated by the big three producers, further strengthening their vertical integration. But by far the most important element of all has been their historical control of the resource base.
JK Is this where the question of who owns the land and the mineral rights comes into the picture?
GC That’s right. As mentioned earlier, one of the most distinctive features of the platinum industry under apartheid was that its major reserves fell within the borders of two ‘homelands’: on the one side was Bophuthatswana, where the western limb of the platinum bowl outcrops. This is the region centred on Rustenburg and where Marikana is situated. The other was Lebowa, where the eastern and northern limbs were located.
Now, a critical feature of mineral law throughout South Africa as a whole (including the homelands) was that surface rights and mineral rights were treated as distinct forms of property, which could be separated from one another (Capps, 2012a). Ordinarily, a mining company would therefore not only have to negotiate a surface lease with the landowner and pay rent but also negotiate a minerals lease with the minerals owner – who could either be the same or a different person – and pay them a royalty for the exploitation of those resources. During the colonial era, for example, exploration companies bought up the mineral rights to vast tracts of land, which could then either be sold on or leased out to mining interests independently of the surface owners. And this is exactly how Lonrho started out, which is why it had ‘Land and Exploration Company’ in its title.
However, there was also a crucial difference in the way that this property regime was structured in ‘white’ and ‘black’ South Africa. In the former, both land and mineral owners (farmers, exploration companies, etc.) had very strong private property rights in law, which would guarantee them a good return if they leased out their assets to mining companies. And this in turn meant that mining companies operating in ‘white’ South Africa would have to yield a substantial part of their profits to these third parties in the form of royalties and rents. Generally, however, they were able to get around this problem by buying up the rights themselves, as was particularly the case in the gold industry. But in the ‘homeland’ areas it was different. The intense racial discrimination of the apartheid era meant that individual black people had very limited property rights, and generally it was the homeland governments that exercised control over the land and minerals within their borders. As such, mining companies were able to deal with the homeland states directly, and any rents or royalties – which were invariably lower than in ‘white’ South Africa – were paid to them. The effect was that it was far easier and cheaper to gain access to mineral resources in the homelands at the expense of the ordinary people living on the ground.
Precisely because of the unique geopolitical location of its reserves, this homeland property regime was of particular benefit to the platinum industry in two key ways. First, it enabled the major producers to acquire virtually all the rights to the world’s largest platinum reserve, with Anglo’s Rustenburg Platinum Mines taking the lion’s share through deals with the homeland governments in Lebowa and (to a lesser extent) Bophuthatswana. And secondly, this not only meant that potential rivals would find it very hard to gain access to these resources and hence enter the industry, but also that the major producers could exercise an usual degree of control over the rate of global platinum supply by unilaterally exploiting or mothballing their vast reserves in response to changes in the world price. As such, the homeland property regime played a vital role both in securing their monopolistic position and in developing an accumulation strategy that could cope with the extreme booms and slumps that had historically beset the platinum industry.
JK How did Lonmin fit in with this pattern?
GC It’s important to note that there was an important variation of the homeland property regime in those parts of the Rustenburg region that were incorporated into Bophuthatswana and hence were in Lonmin’s area of operation around Marikana. During the late nineteenth and early twentieth centuries, black people in what was then the Western Transvaal had begun to group together to ‘buy back’ the land of which they had been dispossessed by white settlers since the latter first arrived on the scene in 1837. Because for much of this time it was illegal for black people to enter the property market, they purchased it via white missionaries, who formally registered the land to their mission stations. Interestingly, Lutheran missionaries from Germany played a prominent role here. Later this land was re-registered to local tribal authorities within whose jurisdictions it fell while a change in law permitted chiefs themselves to enter the land market on behalf of their subjects. However, all this was tightly regulated by the state, which also exercised significant powers of ‘trusteeship’ over this tribally registered land. The effects were twofold.
First, because much of this land was purchased with mineral rights attached and formally registered to them, tribal authorities were legally entitled to negotiate leases with prospectors and mining companies and to receive any rents or royalties generated by its exploitation. Second, however, since the state was also officially designated as the trustee of this land, government officials would have to ratify these deals, while the royalties would be paid into special ‘trust funds’ (later termed D-, or Development, Accounts) administered by the state on behalf of the tribes concerned. The intervention of state trustees in lease negotiations in these tribal areas often meant that deals favoured the (white) mining companies rather than the (black) landowners while also creating the conditions for the abuse of the mineral revenues that accrued in the tribal trust funds on the part of corrupt government officials. In 1977, these powers of state trusteeship over tribal land and mineral revenues were transferred from the apartheid government to the new regime in Bophuthatswana when it was granted its fictive independence and so became an important feature of the homeland property regime in the Rustenburg region.
This is all particularly relevant to the Lonmin case since the bulk of its mining area is made up of land that was historically registered in this way to the local tribal authority, the Bapo Ba Mogale. As Stanley Malindi and I have shown in a recent working paper, the Bapo got a very raw deal with the original mineral lease which was negotiated with Lonmin during the late 1960s, and it would take over 30 years before they actually saw a full royalty payment from the mining multinational. There has also been systematic looting of these mineral revenues by government officials and struggles have erupted over the ownership of this land between smaller groups in the area and the Bapo chieftaincy. But perhaps these are issues that we can come back to.
JK How did mining in a homeland area affect the migrant labour system?
GC The mining companies that were now operating within the borders of Bophuthatswana, above all Impala and Lonmin, largely continued to source their mineworkers from the traditional labour-sending areas elsewhere in South and southern Africa, partly because of their existing experience and skills, and partly because locals at this time tended to shun underground work as too dangerous and poorly paid compared with employment opportunities elsewhere. This had two key implications. First, the inherent flexibility of the migrant labour system meant that workers could easily be laid off whenever production was shut down in response to unfavourable market conditions. And so it became an important element of the producer’s accumulation strategy since the migrant system allowed the social costs of the industry’s periodic economic crises to be ‘externalised’ to labour-sending areas far from the actual mining operations. Second, however, it also meant that the rural areas ‘hosting’ these operations were now themselves ‘receiving’ as well as ‘sending’ migrant labour. At this time, everything was done to keep the ‘incoming’ mine migrants apart from the local population by isolating them in giant hostels that looked like military barracks. If they ever tried to rent or build accommodation in the local villages, they were driven out by chiefs, and initially there was generally popular suspicion and fear of them. However, over time, political activists on both sides were able to reach out and build connections, and in one particular instance in Bafokeng (which neighbours the Bapo tribal area) mineworkers and villagers briefly came together in a common struggle against the homeland regime. But things would shift again with the end of apartheid in 1994, creating new social relationships and tensions between locals and mine migrants.
JK So let’s look at the patterns of change and continuity after 1994.
GC The major changes in the platinum industry after 1994 reflected the problematic fact that South Africa had won its liberation at the very moment that the forces of neoliberal globalisation were really gathering momentum across the world. The giant conglomerates that had been built up under apartheid began to restructure their operations by selling off their least profitable assets and focusing on those areas where they would be most internationally competitive. In the platinum sector, this ‘unbundling/rebundling’ process was led by Anglo American, which got rid of its ‘underperforming’ gold and base metal holdings and pulled its different platinum interests together into a new company – Anglo Platinum (Amplats) – of which it remained the majority shareholder. Soon after, the giant Gencor conglomerate was broken up and Impala reconstituted as a stand-alone corporation, while Lonmin itself was created out of the amalgamation of Lonrho’s Western and Eastern Platinum mines as the remainder of the Lonrho group was dismantled. At the same time, the major South African companies effectively ‘globalised’ themselves by listing on the world’s major stock exchanges and relocating their headquarters overseas. The restructured platinum corporations – or their parent companies – would thus increasingly be held by international investors and, as with so much of the post-apartheid economy, subject to the pressures and disciplines of ‘financialisation’. As such, all production decisions in the platinum sector were increasingly subordinated to the single imperative of maximising ‘value’ – that is, profits – for a new and more aggressive breed of global shareholder who viewed platinum as no more than one of a number of potential assets that could be bought or sold, depending on the short-term rate of return (Bowman, 2016).
Ironically, it was the incoming ANC government that had permitted the South African conglomerates to divest as part of the ‘negotiated compromise’ between the forces of national liberation and big business that underpinned the democratic transition. But the effect would be to dramatically shift the historical relationship between the state and capital in favour of the latter in the post-apartheid dispensation, a process exemplified by the platinum boom itself. As I mentioned earlier, the global platinum price began to rise dramatically from the end of the 1990s in response to surging demand from the autocatalyst industry – driven in particular by the burgeoning light diesel market in Europe – and also the white metal jewellery market, especially in India and China. Virtually overnight, this transformed platinum from a relatively small and marginal element of the South African mining industry to its most dynamic and fastest-growing component. Between 1994 and 2009, platinum output grew by a staggering 67 per cent, while production in the gold industry continued its long-term decline at an almost identical rate of 63 per cent. And by 2010 over 24,000 more workers were employed in platinum than gold, while platinum sales were generating higher returns than any other local mineral commodity. The profits were enormous. In 2001, Amplats became the first-ever South African company that earned US$1 billion solely from domestic operations, and its annual profit rate increased by 87 per cent from 1996. And all this, of course, coincided precisely with the industry’s globalisation. Yet, while this made platinum the favourite of the international stock exchanges it also meant that the bulk of these profits now flowed out of the country into the hands of investors and speculators rather than being ploughed back into the domestic economy. Thus, in effect, the more industry expanded, the less South Africa would get to share in the platinum bonanza, as Andrew Bowman (2016) has demonstrated.
The changes at the level of labour were no less paradoxical. From the mid-1980s, the legislative cornerstones of the old migrant labour system had been progressively eroded and reformed. But it would be even more dramatically reconfigured after 1994 in two key ways. First, the mining houses were compelled to upgrade the old single-sex hostels – which had been such potent expressions of apartheid oppression – into family units so mineworkers were no longer divided from their wives and children, and they could all live together. But hostel upgrading was expensive and slow, and so the mining companies began to offer their employees a small Living Out Allowance (LOA) on top of their salaries to rent or buy accommodation in the vicinity. However, because mine wages were so low, and it was virtually impossible for them to raise the bank loans necessary to buy a house, most mineworkers would simply use the LOA to boost their salaries and build themselves a tin shack. And this is one of the key reasons why we saw the dramatic growth of impoverished ‘shacklands’ on the platinum belt at the exact moment the industry was going through its record phase of productive expansion and profit-making. Over time, migrant workers have become more permanently settled in these informal residential areas, sometimes starting a second family while retaining a rural base in their areas of origin. But the effect has been to increase the pressures of social reproduction as wages have failed to keep pace with increased living costs, particularly in the absence of basic public services in the informal settlements. And inevitably these pressures are particularly borne by the women who both replenish the labour power of mineworkers on a daily basis around the mines and raise the next generation in remote rural areas. It is little wonder, then, that the emblematic demand of the great platinum mineworker strikes of 2012 and 2014 was for a ‘living wage’ of R12,500.
The other major change at the level of labour has been an accelerating shift towards short-term contract workers on the mines. Contract labour first began to be used for basic, low-skilled surface operations, but it is now increasingly being utilised in ‘core’ functions underground as well. Recruited from ‘labour brokers’, this growing category of the mine workforce replicates one of the key logics of the migrant labour system in the platinum industry: it is both cheap to employ and can easily be laid off when market conditions are unfavourable, certainly in comparison with the more permanent workers who now have greater formal protection and rights in terms of post-apartheid labour law. Exploitable and expendable labour therefore remains at the base of the platinum industry, but its conditions of procurement and reproduction have changed.
JK If these were the changes at the levels of capital and labour, what about the homeland mineral property regime on which the industry had historically rested?
GC Here we must note more ironies. Although the homelands had ceased to exist with the creation of a new, unitary South African state in 1994, all the mineral leases and deals from the apartheid period remained in force. This meant that the major producers were particularly well positioned to take advantage of the upsurge in global platinum demand, selectively bringing the best resources on stream from their vast portfolios of unexploited rights. However, the industry’s very success at retaining control of the national endowment would also make it the primary target of the ANC’s new minerals and mining policy. Legislated as the Minerals and Petroleum Resources Development Act (MPRDA) in 2002, this had three key components which I’ll outline in turn (Capps, 2012b).
First, the government would effectively nationalise all mineral resources in South Africa by abolishing mineral rights as a private form of property and replacing them with a centrally administered licence to prospect and mine. Given its deepening neoliberal macroeconomic policy stance, it may at first seem surprising that the ANC government would be prepared to nationalise any kind of economic property. However, when seen from the perspective of capital as a whole, this was merely a rationalisation measure since it would save mining companies the trouble and expense of having to negotiate individual deals with a plethora of private mineral owners, while breaking the white corporation’s historical control of the resource base, thus opening it up for new foreign and domestic investment. Indeed, while this move was vehemently opposed by the established platinum producers, the ANC was able to point out that it was merely acting in line with the World Bank’s mining policy guidelines for Africa.
Second, the MPRDA would enable the government to transform the racial structure of mine ownership, both through the preferential allocation of these new mining and prospecting licences to black-owned companies and by requiring historically white mining corporations to meet a minimum black shareholding target in order to retain their right to mine. Eventually set at 26 per cent of a company’s equity, this Black Economic Empowerment (BEE) component would become the main means through which a new black capitalist class was promoted in the mining industry, even if, in keeping with broader trends of financialisation, this largely still tends to be at the level of share ownership rather than effective control at the level of production, and it is mainly leading figures in and around the ruling party who benefited. Moreover, the MPRDA also attached a ‘use it or lose it’ principle to the new mine licences to force the established producers to either utilise their remaining mineral resources or risk having them reallocated to a new black mining company or another investor who was in partnership with one.
Finally, the MPRDA contained measures to promote the socio-economic development of the rural areas ‘hosting’ mining operations. It would now also be a condition of the new mining licences that every company had an approved Social Labour Plan (SLP) that specified how it would contribute to the ‘upliftment’ of local communities, for example by building houses or schools or providing equipment and training, alongside other kinds of ‘corporate social responsibility‘ investments. Moreover, while under the new mine licensing regime all mining companies would have to pay a standardised royalty to the state (another form of rationalisation), rural communities that had previously been in receipt of royalties would be able to retain them so long as they were used for local development. At the same time, mining companies would be ‘encouraged’ to convert these ‘community royalties’ into direct equity stakes, thus avoiding double royalty payments and transforming the mine-hosting communities themselves into BEE partners.
JK How did these different elements of the MPRDA come together in the case of Lonmin?
GC Really, they came together in three main ways (Capps and Malindi, 2017). First, like all the other established platinum producers, Lonmin was forced to go out and find black partners in order to meet the 26 per cent BEE requirement and stay in business. Its initial solution was to form an entirely new ‘empowerment’ company called Incwala Resources, which would hold an 18 per cent stake in Lonmin. Incwala’s shares were first offered to a group of black investors who were close to the presidency of Thabo Mbeki, and mainly financed by private bank loans. However, although the deal was initially lauded as a masterstroke by the mining press, it soon ran into trouble when the platinum price collapsed in 2008 and the investors could not service their debts. Under pressure to keep Incwala afloat, Lonmin then loaned Cyril Ramaphosa’s Shanduka Resources (now part of the Pembanani Group) R2.5 billion of its own money to buy the original black investors out. As a former general secretary of the National Union of Mineworkers and ANC luminary, Ramaphosa was appointed by the Lonmin board as a non-executive director in the hope that he would bring the company political influence and cover. And indeed, as is now apparent from his infamous emails, this was exactly the role he played in the Marikana events. However, as Lonmin‘s profits continued to fall, Shanduka itself would prove unwilling or unable to service its massive debt, and the transaction has led Lonmin to lose money hand over fist.
Second, Lonmin has also fallen far short of its own SLP commitments. During the Commission of Inquiry into the Marikana Massacre, it was revealed that Lonmin had reneged on a pledge to build 5,500 houses for mineworkers and local villagers around its mining complex, a responsibility that lay directly with none other than Cyril Ramaphosa as chair of its ‘transformation committee’. This R665 million commitment formed part of its 2006 SLP, yet, by 2012, only three show homes had been constructed at a time when Lonmin was paying Shanduka ‘advance dividends’ to help service its own loan (Forslund, 2013; Hamann, 2014). This not only meant that Lonmin was technically in breach of its legally binding obligations (Chamberlain, 2015). It could also be taken as evidence that it had cynically prioritised its main BEE partner over socio-economic development of its operational area, calculating – and not without good reason – that if the state were to enforce any aspect of its mine licence requirements, it would be in respect of the former and not the latter.
Finally, there are the ways in which the MPRDA shifted the terms of Lonmin’s economic relationship with the Bapo Ba Mogale traditional authority whose territory forms the greater part of its mining area around Marikana. As was noted earlier, the original mineral lease very much worked in the favour of Lonmin, and the situation was only made worse by deep political divisions in the Bapo chieftaincy itself. Nevertheless, from an early point one of these factions began to push for the existing royalty to be converted into a direct equity stake in line with MPRDA, but Lonmin repeatedly prioritised black investors with political connections, not least Ramaphosa. Worse, it transpired that during the 2000s Lonmin had underpaid the royalties that were due to the community in terms of the lease agreement while elements in the provincial government and tribal authority had looted over R600 million in mining revenues from the Bapo’s trust account. Still some way short of its 26 per cent BEE target, Lonmin management changed tack and in 2014 reached an agreement with the dominant faction in the Bapo chieftaincy (which also now had the backing of the ANC-led provincial government) that the existing royalty would be converted into a direct equity stake in the company, valued at R564 million, along with a number of other benefits. However, no sooner was it done than ordinary community members came forward arguing that the deal was flawed and that the new Bapo leadership was corrupt. Meanwhile, struggles have erupted over its historical control of mineralised land while political violence in the area has intensified.
Here, it’s also worth mentioning that one of the other reasons that the informal settlements where the workers themselves live are so deeply impoverished is that they are often located on tribally registered land. A particularly prominent example is the Nkaneng settlement, which is adjacent to the koppies where the massacre took place. According to the Madibeng Local Municipality, there have been numerous efforts to upgrade Nkaneng and deliver proper services like water, electricity and roads. However, although the funds have been made available through various schemes at both the national and provincial level, these efforts have been blocked by the Bapo traditional authority, which is the registered owner of Wonderkop, the farm on which Nkaneng is situated. For its part, the Bapo authority argues that the mineworkers and their families are illegal ‘squatters’ who have no respect for local customs and should be accommodated elsewhere. Meanwhile, unemployed Bapo youth are regularly mobilised in protests over mine jobs, which they say should first go to ‘locals’ rather than ‘foreigners’. This then points to the ways in which platinum’s unique geopolitical location and the legacies of the migrant labour system are combining in a situation of increasing social desperation, which rather than being alleviated by the ‘transformatory’ measures of the MPRDA is being intensified by them.
JK As a last point, may we shift to the reasons for the bust in the platinum industry in 2008, and what this means for its future prospects?
GC One of the greatest casualties of the 2008 world financial crisis was the car industry. Major manufacturers disappeared overnight while huge state bail-outs were necessary to prevent the whole industry from going under, particularly in the United States. As the leading source of platinum demand collapsed, so did the global price, yet all the major producers had made long-term investment decisions on the basis that the market would continue to grow, and it soon became apparent that the industry was now locked in a crisis of overproduction. Meanwhile, input costs had steadily risen over the preceding years and corporate debts increased. As profits plummeted, the platinum producers came under massive shareholder pressure. But the MPRDA had eroded the big three’s ability to control the rate of supply, both by enabling new players to enter the industry and because the ‘use it or lose it’ principle made it harder to mothball mines until market conditions improved. Worse still, there has been a massive growth in recycled platinum from the catalytic converters of older cars that are now being scrapped.
All of these problems remain, and analysts currently estimate that over 70 per cent of the platinum sector is failing to turn a profit at present. Of the major producers, Lonmin has been worst hit, particularly as a result of poor management decisions over the years. According to its latest results, Lonmin is in such deep financial crisis that it is currently unable to repay its debts despite multiple bail-outs and the support of the South African Public Investment Corporation, which now holds almost a third of its stock. With its share price at an all-time low, Lonmin has now become the target of a takeover bid by a major new player in the platinum industry, Sibanye-Stillwater. Sibanye began life as GFI mining (which was spun out of Gold Fields South Africa) but has more recently been acquiring bargain-basement platinum assets: first, Anglo Platinum’s ageing Rustenburg Platinum Mines, then the newer entrants Aquarius and Stillwater, which were wiped out by the platinum slump. At the time of this interview, Sibanye’s bid for Lonmin has yet to be approved by the South African government and the competition authorities in the United Kingdom, but, if successful, this will make it the world’s second-largest platinum producer, knocking Impala into third place. However, while this may rescue Lonmin’s beleaguered shareholders and stop the mine from going under, analysts warn that the main attraction for Sibanye is Lonmin’s impressive mineral-processing facilities, control of which will cement its place as an independent producer. Consequently, thousands of underground jobs are at risk at Lonmin, while at this point it is also not clear what the takeover will mean for the local rural community and its own equity stake.
As for the future of the industry as a whole, it’s impossible to predict and I can only point to some factors to consider. The light diesel vehicle market is continuing to shrink in Europe and the United States, particularly in the wake of the Volkswagen scandal. This is hitting the South African producers particularly hard because, as we previously discussed, platinum is used in diesel autocatalysts and the South African ore tends to be platinum-rich. Conversely, a new round of growth in global petrol engine sales has pushed up the palladium price to the benefit of the Russian producers. And while there are many other uses for platinum, especially in the white metal jewellery market and a range of industrial applications, this has not yet proven sufficient to offset the combined effects of the decline in the diesel market and the erosion of control over supply. So, things are looking pretty grim for the South African producers at present, and it is probable that more firms will go under and mergers and acquisitions will increase.
The most obvious way out of this predicament, at least in the short term, is the imposition of tighter vehicle emission legislation in existing diesel markets – particularly in the global South – which would require catalytic converters with higher platinum loadings. Some analysts believe South Africa should be lobbying hard for stricter emission controls in emerging car markets and setting an example by enforcing them in its own. But there has been little sign of this happening so far. The longer-term hope for the industry, somewhat ironically, is a shift away from carbon-based energy altogether through the uptake of new hydrogen fuel cell (HFC) technologies. HFCs generate electricity by combining hydrogen and oxygen, with platinum as the catalyst. The major motor manufacturers have for some years been experimenting with HFCs as an alternative to battery-powered cars, while there is also strong interest in the possibilities for HFCs in public transport systems, both road and rail. If any of these took off, it could completely transform the platinum industry in the way that catalytic converters did from the 1970s. But opinion is currently divided on whether the technology will be viable on a mass scale given that HFCs currently require high – and hence expensive – platinum loadings and an entirely new hydrogen infrastructure – encompassing manufacturing, transportation and fuelling – would have to be put in place. Still, given its enormous potential, the South African state could be playing a leading role in developing a new carbon-free economy centred on HFCs through a coordinated industrial strategy that began with its enormous platinum reserves and ended with its substantial energy and car industries, under worker and community control. But for now, the industry remains locked in crisis and is unable to escape the pathologies of the market.
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Three monuments in Johannesburg
Commemorating the importance of miners in the history and development of the country, the statue of Andile Msongelwa (2013) is a gift from the Chamber of Mines and a number of trade unions.
The statue of the settler George Harrison designed by Tinie Pritchard in 1987. Harrison is said to be the first person to discover gold in 1886. A work commissioned by the city of Johannesburg for its 100th anniversary.
