Enormous challenge lies ahead for SA mines
As SA’s mines ramp up operations to full capacity amid the pandemic, health and safety concerns are top of mind
As 200,000 mineworkers make their way across SA to join an equivalent number of their colleagues already back at work, the industry is fervently making preparations to mine amid the Covid-19 pandemic. It offers an ominous glimpse into the enormous challenge that lies ahead.
Assuming that public health facilities may be overwhelmed at the peak of the pandemic, SA mining companies are converting old hostels and even renting church halls to prepare beds for infected workers.
Sibanye-Stillwater, the largest private sector employer in the country, has converted old hostels to quarantine facilities for 1,800 people at its platinum mines, and 800 at its gold mine. The company has also reserved 100 hospital beds for its workers.
Impala Platinum (Implats), which has 55,000 employees, has prepared 108 isolation beds, 777 quarantine beds and 319 hospital beds.
Anglo American, meanwhile, is bulking up capacity at its coal mines in Mpumalanga, where 85 new beds have been installed and 107 freed up. It’s also recommissioned a TB ward to treat and isolate Covid-19 patients.
"The penny is starting to drop. We are in a deep crisis," says Minerals Council SA president Mxolisi Mgojo. "I’m not sure to what extent people really understand the crisis we are in … The only way we are going to get out of [it] is through a joint effort."
On Monday, the nationwide lockdown eased to level 3, allowing for mines to ramp up from 50% production to full capacity. Many have opted for a phased-in approach, ramping up slowly in the coming weeks, dependent on the labour intensity at each operation.
As more and more miners report for work, the number of infections is expected to rise.
As of June 2, the industry had screened 220,500 employees and tested 6,660, with 464 positive cases confirmed. One employee with a co-morbidity has died.
"As SA as a whole sees an increase in cases as more and more testing is done, in a well-organised sector like mining you are going to see an increase in cases detected. It shows our systems are working," says Minerals Council CEO Roger Baxter.
Mineworkers are among the most-screened employees in SA, comparable with health-care workers. Mine employees are screened every day before they enter the workplace, allowing for most cases to be caught before the worker sets foot on site, the council says. From there, the worker is quarantined and isolated if necessary.
The mines also work in conjunction with the department of health to track and trace those who have been in contact with an infected person at work or in the broader community.
With the number of infections expected to peak in September, Covid-19 is something SA and, indeed, the industry, will have to learn to live with for some time to come, Mgojo says.
Infections in the sector so far include outbreaks where a concentration of cases have led to mines shutting operations. Notably, Implats’s Marula operations in Limpopo were the site of a cluster of 19 infections. In Gauteng, AngloGold Ashanti’s Mponeng gold mine — the deepest mine on earth — was found to have 164 Covid-19 cases.
The clustering of cases has prompted questions over what percentage of infections in the workforce will trigger a closure. But so far no such level has been set, and the industry says operations will be closed on a "sensible basis".
Unions are worried. The Association of Mineworkers & Construction Union has called for universal testing of all workers. But the council says this is not feasible. Not only is there a local and global shortage of testing capability, but testing a worker at one point in time will be of little value if they are infected thereafter, it says.
Gideon du Plessis, general secretary of trade union Solidarity, says the economic reality of the lockdown has set in. "Solidarity is involved in 232 section 189 [retrenchment] processes, and 13 business rescues and liquidations," he says. "A survey found 60% of Solidarity members had to take a salary cut, while 6.6% believe the company they work for is no longer sustainable."
Unions have been working closely with companies to facilitate a safe return to work.
The industry is obliged to follow the guidelines of both the National Institute for Communicable Diseases and a mandatory code of practice set out by the department of mineral resources & energy. Still, some companies are going beyond the requirements.
Gold Fields, for example, will test every worker returning to its South Deep mine — its last remaining asset in SA — and expects it will take six weeks or more before its 3,900-strong workforce (barring those vulnerable groups and those outside SA) returns to work.
Anglo American, meanwhile, has established its own in-house Covid-19 testing capability.
However the ramp-up happens, it is imperative that mines get as close to full production as possible.
As Implats corporate relations head Johan Theron explains, mining operations have high fixed costs and are not designed to idle, and have to be run efficiently. With current metal prices and a weak rand, "these deep-level mines at 75% or 80% production could be just about cash neutral".
But it’s critical that higher production levels are reached. "To go out of business, you just need to run at 50% production capacity for a few … months," he says.
Though the weak rand has helped matters — mines earn in dollars — from a purely capitalist perspective, it would be better to stop the mines completely until the pandemic has passed, Theron says. "The cash remains in your bank, the minerals remain underground, no-one gets a salary, [and] the available metal gets absorbed by the market so after the pandemic you could start up with higher metal prices. If profit maximisation were the goal, that’s how you’d do it."
As corporate citizens, however, mines have other reasons to keep going. At 80% "you’ll not make a profit, but you won’t make huge losses. You’ll be able to wash your face and be sustainable for a period of time," Theron says.
With mines running at 80%, employees will earn wages and suppliers will continue to trade. Though not profitable, mines will still pay tax to the government in the form of royalties and income tax.
The big advantage for the government is the export of mineral resources, which is key for the country’s foreign exchange earnings.
For all these reasons, Theron says, the industry has to find a way of remaining operational in the months to come. "We have to work through it in a risk-adjusted, measured way so that we all get sick at a rate we can handle."
Peter Major, director of mining at Mergence Corporate Solutions, says only a few SA miners are likely to make much money in the coming months, and even they are unlikely to be paying much in dividends. "But they will be scoring brownie points, with government, communities and unions," he says.
"Mines have to be able to at least break even and those that find themselves losing money will close, albeit temporarily, we hope."
Major sees the market as the best predictor of the Covid-19 fallout for now. And so far it’s the likes of big "underground" employers such as Harmony Gold and Sibanye-Stillwater that have been the worst affected. "That tells you that the biggest worry for investors and management alike is if you are underground, and if you are in SA."
For deep-level gold and platinum mines in SA — where it can take hours for workers to reach the rock face — there is no blueprint for this challenge.
Sibanye-Stillwater spokesperson James Wellsted says the more mechanised mines are likely to get closer to full production.
Social distancing will also affect operations. For example, the cages that lower workers down the vertical shafts ordinarily take 100-120 people; now they will have to take 25%-30% fewer.
Still, the industry has had its fair share of health challenges over the years, and is perhaps better equipped than most to tackle the crisis.
The sector made notable strides in dealing with TB, a communicable disease for which mines have traditionally been considered a source of infection. But a dedicated effort has meant rates of TB infection on the mines are slightly lower than the national average today, while the cure rate is high.
The industry has also had remarkable success in the fight against HIV.
A high level of safety consciousness at mines also puts the industry at an advantage in adjusting to Covid-19 measures, says Anglo American spokesperson Sibusiso Tshabalala.
"Our ability to encourage the extra measures that we are required to — it has not been as steep a learning curve as what you might have in a different industry," he says. "[In mines] wearing PPE [personal protective equipment] is something that is a stock-standard requirement across the board."
There is also technological innovation intended to solve other health and safety challenges in the industry that is being repurposed.
AngloGold Ashanti, for example, is using the electronic tags intended to find missing miners to track and trace the people an infected worker has come in contact with.
Du Plessis agrees that SA mining is better equipped than most. "Given their health and safety focus, mining [companies] are the trend-setters in dealing with this," he says.
But if they fail, he warns, "there will be a knock-on effect for other businesses".