PETER MAJOR: SA mining — from pygmy to powerhouse
SA’s mining sector has gone through wrenching changes over the past 40 years — not all of them good
I landed in SA on January 7 1982, after an almost four-day trip from my town of Kellogg, Idaho, home of the world’s richest, deepest silver mines.
And yet, those Idaho mines were mere pygmies compared to what I would find here.
Not that I was surprised — I’d done my homework. SA had been my passion since I watched the news in December 1967 of Christiaan Barnard’s amazing heart transplant operation.
That passion was further fuelled by the run in gold prices that began in 1971, and possibly more so in early 1974 by the movie Gold, with Roger Moore as the mine manager of a Buffelsfontein GM lookalike.
In 1980, SA’s market cap of listed mining companies was nearly 50% of the world total. Unbelievable today.
But in the 1950s, 1960s and 1970s SA was Mission Control for mining. Almost every underground mining record that could be imagined seemed to have been set here. The statistics were staggering: more than 500,000 men worked on the gold mines alone, and 300,000 on other mines.
Astounding tunnelling and shaft-sinking records abounded and the rate of construction of new mines and mills, smelters, railroad sidings, ports, power plants and loading terminals seemed endless.
SA’s economy grew at over 5% a year in the 1950s and 1960s despite tepid world growth and weak commodity prices in general.
By 1982 the commodity boom of the 1970s had passed, but the industry here took the lower prices in its stride: 100 years of mining teaches you how to handle cycles.
Yet economic changes weren’t the real buzz. Political change was the big topic; it permeated everything. Everyone knew SA was accelerating towards something different.
The commodity boom of the previous decade had unleashed unprecedented rises in mineworkers’ wages, especially in the lower spectrum.
Each new employee received more pay and benefits than before. Each new hostel and mine village was better designed, built and allocated than the previous one.
I was single, 26 years old, degreed and had nearly eight years’ experience, yet my pay was only 15% more than the control team leader working with me who had matric.
He was married and lived in a new house with his family next to the golf course. Being single, I was lodged in the hostel.
Oh, yes — I paid taxes and he didn’t. But the "real" difference was, as the mine manager told me: "He’s making us production, Peter. You aren’t, yet."
Apartheid on the mines fell fast after the Wiehahn report of 1979, and the white mineworkers’ strike that year was robustly resisted and defeated by both the government and the mining companies. Change was coming.
Even before I became a mine official we were all told to start identifying and training future management personnel from our black co-workers. It was easy to do this.
Though there was the job reservation barrier between white and black staff, pay and promotion on both sides of the divide were based on merit.
Those who produced the most and best — in production, costs and safety — received the best pay, opportunities and promotion.
Houses and other benefits abounded. Government regulations were rapidly being adjusted, in discussions with the companies, to increase equality, economic activity, growth and jobs. Everyone knew job reservation was ending, and apartheid with it.
The differences between SA’s mining in the 1980s and now are stark.
There were over 140 mine training colleges on over 60 gold mines alone in the 1980s.
The six listed mining houses competed with the three parastatals Sasol, Iscor and Eskom for men, training, standards and performance.
These nine were all titans and had woven world standards into their culture and ethos. Their healthy balance sheets, breadth of in-house skills and capabilities were unrivalled in the world. These nine could do any kind of world-class job. Meritocracy was the name of the game, and their contributions to SA were huge.
Fast-forward to today. Populism and state capture have almost destroyed underground mining in SA.
Most to blame is poor and destructive legislation, created by people and parties with no experience or recognition of the consequences it has on companies, the country and its people.
Never has a government seemed to have such a flagrant disregard for an industry and its contribution to the country as we have seen this millennium. It’s insane.
On a happier note, I had become an avid reader of the FM by April 1982, barely four months after my arrival. It was by far the most unbiased and accurate encapsulation of all that was happening in SA.
There are perhaps a few more political articles and columns today than was the norm in 1982.
But its incisive analysis of companies, people, economics and finance is as much a must-read today as it was in 1982. On that side, nothing’s changed.
• Major is director of mining at Mergence Corporate Solutions