EMOTIONAL TIME: Supporters of arrested platinum mineworkers pray outside the Ga-Rankuwa Magistrate's Court in 2013. Picture: REUTERS
EMOTIONAL TIME: Supporters of arrested platinum mineworkers pray outside the Ga-Rankuwa Magistrate's Court in 2013. Picture: REUTERS

More platinum wealth lies beneath South African soil than anywhere else on Earth, and for decades the companies that extracted the precious metal promised to help improve the lives of the impoverished people who live above their mines. Those communities are getting tired of waiting.

Demonstrations by residents around mines have disrupted operations run by producers including Impala Platinum, Lonmin and African Rainbow Minerals (ARM). The protesters demanded jobs and money, saying that investments outside of the mines have not been enough. In May, a bus that ferries Lonmin workers was torched, forcing the company to halt operations at two shafts.

While SA’s mining industry is no stranger to social unrest, the latest clashes are heaping more pressure on a business already squeezed by prices that are about half what they were in 2010. Companies say they support local economic development but have limited scope to hire and invest until profits improve. SA produces about 70% of the world’s platinum, which is used in jewellery and mostly as a catalyst to reduce car-engine emissions.

"The mines don’t appreciate how upset people are," said Vladimir Mogale, a spokesperson for the Bapo Ba Mogale community, which lives close to Lonmin’s Marikana mine. "People feel like they have to burn a bus to get a response." Mogale said he condemned any violence.

It has been a difficult few years for platinum producers and the people who live near the mines. In 2012, 34 protesters were killed by police near Marikana. Three years ago, about 70,000 mineworkers went on a five-month strike that stifled economic growth and led to job losses.

As platinum prices fell and industry costs rose over the past decade, dividends paid to local community trusts dried up and many pledges to improve living conditions went unfulfilled. Frustration is now bubbling over in mining communities, which typically include a mix of mineworkers, job-seeking migrants and rural populations who have been living there since before mining started. Platinum is down almost 60% from its 2008 peak.

The Chamber of Mines, which represents producers, accepted that companies needed to do more to involve black people in the economy, outgoing president Mike Teke said in May.

"We’re dealing with a fire," said Mxolisi Mgojo, newly elected president of the Chamber of Mines. "It’s the cry of a need to be involved and participate in the economy."

In 2006, Lonmin pledged to build 5,500 houses but had completed just three of them six years later, according to Amnesty International. The company estimates that half its workforce lives in "substandard" conditions. It has converted all its single-sex hostels into homes and has built 493 of a targetted 1,240 new apartments.

The company was currently conducing a review of its housing strategy with unions and would complete it in the middle of 2017, spokesperson Wendy Tlou said by e-mail. Lonmin would "continue to engage with the unemployed youth and find sustainable ways to address these issues", including offering career guidance for young people, she said.

In Madibeng, Lonmin’s local municipality, only 27% of households had flushing toilets connected to sewerage, according to census data from 2011, the latest available. In Greater Tubatse, where Impala, ARM and Northam Platinum have nearby operations, only 6.3% of households had flushing toilets and unemployment stood at 50%.

So far, protests have had little real effect on platinum output or prices, and global platinum supply is expected to exceed demand in 2017. However, the disruptions are inflating costs that may mean more cuts in output and jobs. More than half of the industry’s production already is losing money, according to top producer Anglo American Platinum.

"Without growth how do you bring people further into the economic stream?" asked Mgojo. "You need to have growth as a catalyst."

Bloomberg

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