Mining bosses blackmailing the economy - Blade Nzimande

SACP GS says there must be accelerated consolidation of democratic public control over mining in our country

Red Alert

Mining bosses enjoy wealth accumulation from our mineral resources alone, shove off any “loss” upon workers as soon as the rate of profit declines

Thousands of workers in South Africa are facing jobs bloodbath. At the centre of the attack on workers, their families and the country is the mining sector and its immediate forward linkage, steel production. Private capital enjoys the fruits of our resources and production alone. The mining bosses enjoy the benefits of super profits from our resources – also known as resource rents – alone. A surplus value after all costs and normal returns have been accounted for, super profits have become a norm among others in the mining sector. Especially in times when there is a resource boom and prices are high the mining bosses make a killing.

In addition, they sell our own mineral resources to our country as if they were imported from outside. In other words they raise the price levels of these local products to import parity prices (IPPs). IPPs are prices of imported products which include not only the cost of production but also international transport, other logistical costs and tariffs. The mine bosses then appropriate that money as an extra part of their profit. Steel producers are also doing the same. This has the net effect of stifling economic development and destroying jobs.

But as soon as prices decline to their normal levels of returns or below – taking into account that “normal” still relates to IPP levels – the bosses intensify their attack on the workers through restructuring and retrenchments. This is the situation facing workers presently. Recent media reports coming from mining and steel companies reveal that thousands of workers are facing retrenchments. 

In the gold sector alone 13,000 jobs were cut since last year, according to the Chamber of Mines. Harmony Gold at Doornkop, west of Johannesburg, has threatened to make 3,040 workers redundant. At Glencore’s Optimum Coal Mine, 1,067 workers have been faced with retrenchments. 359 workers have already been dismissed and 267 have been forced by the retrenchment to accept the so-called severance packages.

Recently, Kumba Iron Ore stated that it had scaled back on 1,772 jobs and cut 31% of its staff at its Kolomela and Sishen mines in Northern Cape. The company cut 351 jobs at its headquarters. It is further planning to close its Thabazimbi Mine in Limpopo. This will impact negatively on approximately 800 employees and 360 contractors.

By far the biggest number is at Lonmin. The company announced it has planned to retrench 6,000 workers. The SACP warned from the beginning of the strikes in 2012 at Marikana and elsewhere, including Anglo American Platinum (Amplats) in the Rustenburg platinum belt, that these strikes were engineered by the bosses and their collaborators as part of their restructuring strategies. At that time, Amplats announced that it had planned to retrench 14,000 workers. Recently the company has announced that it is planning to retrench 420 workers.

Some of the looming retrenchments are directly being linked to collective bargaining by the bosses. Their argument is that workers must accept meagre wage increases or lose their jobs. Not only are mining workers facing retrenchments, but the whole economy is being blackmailed by the mining bosses. The spokespersons of mining capital are claiming that the problem is workers and their wages. Yet, according to mining companies’ own annual reports, their CEOs earn multimillion rands per annum.

Compared to the workers who take home less than R6,000 a month presently, one man, Amplats CEO, Chris Griffith, was paid R17,6 million two years ago, in 2013. He was also awarded R4 million as a bonus share plan as well as an offer of a further R11 million provided that performance targets were met over three years.

In the same year, Lonmin’s CEO Ben Magara was paid R12 million and received R11 million in shares. Think about how much is being paid to the directors and in dividends to the shareholders individually compared to the workers who cannot afford even to buy their own houses – let alone to meet all their other material and cultural needs. 

A question may as well be asked here as to what extent are these hefty salaries of top management and shareholder dividends also a major contributory factor to the retrenchments and other types of restructuring of the working class? This calls for the working class, especially organised workers, to take up the campaign in earnest against excessive executive pay by and shareholder dividends, and for, the bosses in a country like ours.

Of course the big question, in the midst of all of this is:

What is to be done?

The transformation of the mining sector cannot, and should not, be taken in isolation from our overall national democratic strategic priorities. At present, our immediate task is to radically reduce the persisting high levels of racialised and gendered class inequality, unemployment and poverty. Job creation is an essential component of this task. However, we must be under no illusion that jobs alone can do away with class inequality and poverty. There are many working poor in our economy, including mine workers. As we have shown, inequality in the mining sector is extreme.

There are therefore many things we need to do over and above job creation in order to reduce social inequality and poverty.

As the SACP states in its document Expanding democratic public control over the mining sector’ (African Communist, Sep 2010):

Mining depletes nonrenewable natural resources. The key strategic question for any country with a strong dependence on mining is, therefore, how to use this resource in ways that ensures it is leveraged to place the country on to a sustainable developmental path beyond the time when the resource is exhausted or too costly to exploit.

There must be accelerated consolidation of democratic public control over mining in our country. State ownership, including strategic nationalisation, is one important means for realising this imperative.  However, on its own, nationalisation is too narrow for approaching the totality of tasks required for the effective transformation of mining, and indeed of our economy as a whole. It can serve contradictory class interests.

For instance in 2002 we nationalised the mineral resources beneath the soil through the Minerals and Petroleum Resources Development Act (MPRDA). The change was largely hijacked and leveraged to serve the narrow primitive accumulation interests of the emergent black capitalist stratum under BEE deals, while the people as a whole gained nothing in terms of social ownership, including communities whose land is being mined. The MPRDA had no effect whatsoever on established and imperialist monopoly capital. Their accumulation regime has reinforced itself, despite the Act, and more money is expatriated overseas.

As we are currently observing, both big capital and their BEE intermediaries blame any decline in their rate of profit to the workers – the direct producers – who are then placed on the receiving end of any loss (e.g. in capitalist terms, a reduction in profit from 110% to 100% is considered to be a loss).  

However, advancing state ownership must not be seen as an end in itself. It must be seen as a means to an end, in particular, the socialisation of ownership to benefit the people as a whole. This as opposed to benefitting a few individuals who serve as the intermediaries of both established and foreign capital to pursue their own private interests of wealth accumulation. In political terms, this has modified the class position of many former revolutionaries who have reached the higher echelons. In reality, their new interests are in direct contradiction to those of the masses. This has given rise to new political problems.

It is also imperative that as a country we move decisively with the beneficiation of our mineral resources as part of a strategy to make better use of such resources.    

The MPRDA must be amended so that the nationalised resource is now used to advance the wellbeing of all our people through our key strategic objective – placing our transformation on to a second, more radical phase of our democratic transition. This must include reorienting our development finance institutions (DFIs) to focus more on the development of socialised ownership for the benefit of the people as a whole. 

As the revolutionary alliance, we have made the decision that we must strengthen the current state owned mining companies and create a new one – and more as and when the need arises. Under the present crisis – we need to move vigorously. We actually need more than one such state owned corporations.

Those companies that shut down or hoard productive shafts and refuse to adhere to mining regulations must have their licences for the affected operations cancelled. The affected operations must then be handed over to state ownership!

Mining licence regulations must, in turn, be strengthened. In addition we need to place much more emphasis on downstream beneficiation, job creation and other social responsibilities. We must be stricter on the question of avoiding retrenchments – which can only be a measure of the last resort.

Many retrenchments that take place are actually unlawful. It is wrong for a company to announce job cuts and numbers thereof without having exhausted meaningful consultation with labour to avoid retrenchment first!

Another strategic area that needs urgent attention is that currently the state has no control over the prices of our own national resources that have been nationalised. The first step to establish democratic public control in this regard is to take the rightful ownership of resource rents! As the starting point, we must impose a windfall tax of at least 50% on resource rents.

We must abolish IPP on our resources for productive use in our economy. We must move decisively to identify strategic minerals and set quotas for the same purpose. In particular, to drive industrialisation and expand productive work to absorb millions of the unemployed. The countries that produce oil are organised and do exercise influence on its prices. We must do the same in terms of scarce mineral resources where we have the largest world reserves and production.  

A key component of the strategic task to transform our economy is to change its basic structure from that of the colonial system of being the supplier of raw materials in the international division of labour. The Industrial Policy Action Programme (IPAP) is a key instrument that must be strengthened, sufficiently resourced and rigorously implemented to alter this colonial regime. The mining sector needs to be aligned with and integrated into IPAP.

However it is also going to be important to expose the hypocrisy of both the opposition political parties and sections of the media on their selectivity and biasness regarding the reasons for the current job loss bloodbath.

The DA and the media blame this offensive by the capitalist bosses, on government. For instance today in parliament DA leader Mmusi Maimane is asking the President a question which amongst others points to the fact that: “outward FDI flows increased by more than 10% as South African companies sought profits elsewhere in the world, (and) what plans and targeted interventions does the Government have in place to turn the tide...”

In essence the whole problem is being blamed on government, with no question on the behaviour of capital and its private wealth accumulation regime. Yet the SACP discussion document, ‘Going to the Root’ points to serious complicity by monopoly capital in running down our economy precisely through divestment, price fixing and collusion, tax avoidance, etc., but for Maimane this is not a problem.

The Times editorial of today, that mouthpiece of the most backward of mining capital, is even more outrageous on the above score (see here). The editorial is typical of political blackmail of government and our democracy by right-wing tabloids. It says:

“A toxic mix of plunging commodity prices, years of industrial unrest and power constraints, as well as government policies, have decimated mining, leading to a job loss bloodbath”.

The Times then continues to single out some of the government policies:

“Why wrangle with the mining houses over the minutiae of their compliance with equity and ownership targets when the livelihoods of tens of thousands of people are on the line...

“Why withdraw the mining license of a 10 million-ton-a-year coal mine because you believe it has not followed legal procedure in its plan to cut 380?”

It is instructive how such a racist agenda has become emboldened in recent times beyond just the media!

In other words the publication is saying to us as a country we must reverse and abandon all of transformation, allow the law of the jungle with no ‘legal procedure’ to operate, and return to the racist labour market regime of the past (and not bother with “minutiae of compliance with equity”). And we must also return to mining companies of the past whose management is lily-white, with no rights for black mineworkers! In other words, the message is clear and the battle lines are drawn: we must surrender transformation and most of what we fought for as a trade-off for jobs and investment!

This confirms that blaming the government for everything is often part of a racist agenda and offensive from apartheid political and economic beneficiaries against our democracy, acting in cahoots with imperialist capital. That is what the DA and for instance the Times Media Group have in common. It is therefore important that we engage on this front of the battle of ideas in order to expose it. We are not saying government has no role to play, but the capitalist bosses cannot be blameless and be allowed to get away with murder, and instead only blame those who are trying to change the conditions of the working class for the better.

The SACP is also aware that part of this blatant offensive against workers is emboldened by the divisions amongst organised workers in the mining industry in the current period (divisions engineered by the very same bosses in the first place), and the current weaknesses in COSATU.

We are also aware that imperialism, especially in countries where there are little prospects of unseating a liberation movement from power if approaching it from the political right, tends to manufacture and sponsor ultra-left or pseudo-left groupings who try to appear more left than the revolutionary left associated with the liberation movement. Yet the intention is the same; that of a regime change agenda against the movement.

At the same time, as our recent Alliance Summit declaration warned, we must also fight against the corporate capture of sections of our own movement by the very same forces that are responsible for this assault on the working class. This is because such capture emboldens this class offensive, whose ultimate goal is either to capture our movement or to dislodge it if they fail.

All the above underlines the importance and relevance of our recent Special National Congress theme for some years to come; the absolute necessity of uniting the working class, our communities and our movement, as part of driving a second, more radical phase of our transition! It is a clarion call to organise and close ranks!

Dr Blade Nzimande is SACP General Secretary, ANC NEC and NWC member, and Minister of Higher Education and Training.

This article first appeared in Umsebenzi Online, the online journal of the SACP.