Diamonds aren’t forever – not in SA

It was announced that DeBeers, the South African Company that dominated the global Diamond Market for yonks has decided to throw in the towel as far as South Africa is concerned and it was no surprise that they sold their second biggest and one of only two diamond mines remaining in South Africa.

The decision to sell Finsch Mine was an easy one. De Beers, years ago decided to get out of the country. Mining, because of labour (COSATU) and government (ANC) became too expensive and the margins to thin. The risks of tenure and other regulatory uncertainties curtailed exploration and the decision was made to sweat the assets and get out leading to the mass sell-off of mines. The Kimberley mines were the first to go with the BEE-company taking them over, KCM – loosely connected to the Zuma clan – recently suspended from the JSE. The Cullinan mine was taken over by Petra and are barely surviving – albeit at a much smaller scale with considerably fewer people than before – thanks to the find of a typically massive and “lucky” gem; luck that cannot continue for much longer.

Finch Mine does not have the luxury of huge and lucky gems. The mine depends on the mass production of cheap industrial diamonds and small low value gems. Petra no doubt will reduce the size of the mine and scavenge dumps and easily accessible ore of which there is little left. Going deeper will require huge investment, investment DeBeers baulked at for good reasons.

The sad thing is that in 2005/6 Finsch Diamond Mine became one of the most technologically advanced hard rock underground mines in the world; a true pioneer. The technology employed at Finsch was critical in ensuring the viability of sustainable continuing operations.

Because of the South African skills shortage it became increasingly difficult to support the advanced mining technology at Finsch mine and future investments in this technology became just too risky given the deviancy of the Department of Minerals. In the end the selling price of Finsch Mine of $200 million hardly equates to the cost of the Mine Automation Project.

Sadly many of the excellent engineers developed in this process have left South Africa. They work abroad for DeBeers and for the companies involved with DeBeers in the development of the technology.

With Finsch gone, Venetia Mine remains the last Bastion of the erstwhile DeBeers South African Empire, in South Africa – an empire destroyed by transformation. The mine will be retained by DeBeers until the easy resources are exhausted, the assets have been sweated properly upon which it will be flung aside to be used by unscrupulous BEE companies, like KCM, to fleece unsuspecting investors.

Resources are not inexhaustible and for that they must be recovered effectively and investments must be made in finding new resources. In South Africa this cannot be done because of inflated labour costs, ineffective training and education, a government threatening ownership, a ruling party prepared to steal mineral rights for the benefit of a select few in the top party echelons.

NUM Humiliated

The humiliation suffered by the National Union of Mineworkers because of their unsuccessful strike action at Rustenburg platinum mines, Aquarius and Impala was long overdue and couldn’t have happened to a nicer bunch of people. The bloody nose they received may bring sanity back to the workplace. The strikes, like the other strikes and service delivery protests we had to endure over the past months is largely because of expectations created by the governing ANC and it’s partners in the run-up to the election. In most of the strikes to date unions and their members embarked on strike action, despite receiving wage offers well in excess of the inflation rate. In most cases, the strike action was rewarded with additional small, token, yields by the employer, which inevitably amounted to less than the ultimate losses in earnings suffered by the happy, dancing strikers. NUM, propagators of the construction industry strike and the Crocodile River hostage debacle, have been cock-a-hoop about their successes in holding the country hostage and their successes, which amounted to very little more than victory for the union leaders. 

The Aquarius and Impala strikes were however different and can prove a turning point. In both cases, the union representative created expectations of a high increase—reflected in the extreme nature of the demands—with members. In both instances, union leaders eventually agreed to management’s final offer only to find they could not convince their members to accept the offer. Members embarked on strikes at both the mines and NUM leaders found they had no control over the members. A matter of concern to the mining companies because of the threats to life and property. 

At Aquarius, fourth biggest platinum producer in the world, the 2700 strikers were dismissed and a process of re-engagement commenced. This created the opportunity to streamline the workforce, still slightly bloated by the feeding frenzy during the last platinum boon. As a result, the union action will probably be 300 -350 job losses. NUM leaders at Aquarius suffered a total loss of credibility with some beaten up and others having to go into hiding. The dismissed workers who are lucky enough to be re-engaged, will probably lose some of their benefits whilst the less lucky ones will go home without so much as handshake, never mind a severance package. 

The strike at Impala involved 25 000 people and the situation was slightly more complex. When the Union, after agreeing to management’s final offer, failed to convince the workers to accept the 10%  offer, they embarked on a strike. Impala wanting to box to Queensberry rules, applied for a court order to force the workers back to work. The attempt failed, the strike went ahead accompanied by the obligatory intimidation and associated violence. A minority of workers never went on strike, a fact denied by NUM, in a vain attempt to convince the world that solidarity was unaffected. After a few days, it became clear that deep divisions had developed within NUM, acknowledged by an insider after the strike ended. The divisions manifested itself when it culminated in a vicious attack on the deputy president of the union by members,  resulting in him losing his eye whilst trying to convince them to go back to work. A branch leader was badly beaten in the same incident. Again, NUM tried to white wash the incident by blaming criminal elements for the attack. They were of course correct in their assertion, the attackers are criminals but they are also members. The divisions became deeper and the disillusionment with NUM grew, so much so that on Monday, a regional representative was held hostage at one of the Impala mines, his clothes were torn from his body before he managed to escape and go into hiding. Following the incident, the entire branch committee was kicked out and a new committee was elected. The new committee went to the rest of the mine and convinced workers, supporting the strike action, to go back to work. 

The miners returned to work on Tuesday and the CEO of Impala issued a statement outlining the cost and losses suffered because of the two week strike. He made it clear that attempts will be made to recover cost by cost cutting which will inevitably lead to the closure of marginal shafts and the commensurate job losses. Fortunately, for Impala workers, now facing the prospect of retrenchment they will, unlike the Aquarius workers, receive severance packages, not that they deserve it. Despite this, NUM having to save face declared that the strike action was a worthwhile exercise and a victory for the union. 

The divisions, so clearly illustrated in these two cases, mirrors the state in which the Broad church of the ANC in North West and other parts of the country finds itself. Divisions, between the executive, the branches, the regions, left, centre, right and ordinary members, run deep. People are becoming disillusioned by the empty promises and mindless rhetoric. The events in Rustenburg, was a heavy blow to NUM, especially when they hoped the wounds, left by the rift between Mantashe and Palane had healed This time however, the divisions  go beyond NUM and extends into the heart of the ANC. 

Unfortunately, because of this shortsighted action, the innocent will suffer but that has never a consideration with unions and its members. Because of job cuts to be implemented to compensate for losses suffered and to maintain profitability, some NUM members, who refrained from participation in the strike will lose their jobs. Some loyal workers, middle management and senior management, employees who never strike and have already agreed to zero increases, because of the low commodity prices and thin margins, will be retrenched because of the action of the NUM members. Many of the retrenched managers and senior officials facing retrenchment employ domestic workers who will now lose their jobs swelling the ranks of the unemployed. 

Despite the facts staring us in the face, NUM claimed the strike was a positive action. The truth is, there are no winners here. We can only hope those, who selfishly caused this tragedy, learned from their folly. I doubt that though. Subsequent to these strikes, COSATU defiantly defended absurdities such as soldier mutinies and threats by the desperate textile industry to strike, despite being closed down by cheaper and better Chinese imports. 

Given our past, this lesson will be forgotten by the time we enter the next election when the next generation of madmen will subject us to new lies and empty promises.

An(c) Economy of Lies

             

ANC party secretary-general Gwede Mantashe yesterday announced that the ANC national executive committee, which met at the weekend, has decided to refer the nationalisation debate to its economic transformation committee, which will then develop the party’s position on the matter.

 In three weeks, we saw this unfolding drama develop from a position of “No nationalisation of Mines to the current position.

Malema, at an ANC Youth League conference three weeks ago, called for the nationalisation of mines, invoking the requirements of the “Freedom Charter”. He was quickly backed by Vavi, Cosatu, Vavi and the SACP.

Gwede Mantashe, in his capacity as Secretary General of the ANC reacted, saying that; “Nationalisation of the Mines are not on the ANC agenda”. Susan Shabangu said a few days later that state owned mines are a possibility.

The youth league reiterates its demand for Nationalisation, again backed by Vavi and Cosatu.

Gwede Mantashe in his real skin as President of the SACP makes another one of his famous U-Turns and agrees to that Nationalisation should be considered. At the same time, Duarte tells the media that the ANC will have a national debate, one of those things we hear about but never participate.

Susan Shabangu, to confuse the market, says Nationalisation will not happen, whilst Zuma agrees with the idea of a “National debate”. On Sunday, ANC policy academic and MP, Professor Ben Turok assured all Sunday Times readers that there is no possibility of nationalisation of mines.

I am sure, as with the replacement of Mboweni with hard line Communist Gill Marcus, many commentators will call this a positive development. The only possible positive spin-off will be the closure of mining companies filled with BEE leeches and no economic right to exist

Does anybody know who is in charge? This is a very strange development in the light of the President’ Assurance that the country is not governed by trade unions. To me it seems the tail wags the dog, or is this “Rule by Confusion and Lies”.

Two weeks ago, that great proponent of truth from ANC ranks, Carl Niehaus referred to the science of lying as perfected by politicians the world over, a science in which our ANC and government do exceedingly well and can justly claim world leadership. Honest Carl proudly told us he never told lies as spokesperson for the ANC, he just used the “Science of Spin”. Was Carl perhaps “spinning a yarn?” I, for one, do not see the difference in blatant lies and spin. What I do know for certain, is that the ANC and its partners and therefore the government of the day is particularly adept at lying. Lenin’s doctrine, which is not out of place for an organisation with a strong communist influence, like the ANC, teaches; “Lies told of enough becomes the truth”. In the face of this double-speak a fitting and well-applied principle of Mr. Lenin’s teachings.

As for the owners and investors, they will not go the marginal mines; they are after the rich ones. For those who expect fair compensation, dream on, there is no money to compensate you for your investment. What will the owners and investors do? They will quietly move their money out and minimise risk.

Application For Membership

                                                                                                            July 4, 2009

The President

Association of Mine Managers of South Africa

PO Box 61709
Marshalltown 2107

Dear Sir,

Application for Membership (Class – Ordinary)

I wish to apply to become a member of your esteemed organisation. There is however a number of issues I need to clarify. Your constitution clearly states the requirements for ordinary membership but there may be a few grey areas in my case. Let me explain.

I am manager of a mine in the Free State, Elands Mine, an operation you may be familiar with since we have been, like many other mining operations the world over and particularly in South Africa, on the receiving end of some negative and, may I say, unfair and unwarranted media attention. The media campaign against us because of an unfortunate, isolated incident of minor consequence resulting in the fire that killed a few unfortunate workers can only be described as a travesty and exceeded the norms of fair reportage. Truth be known, had it not been for the lack of cooperation from the so killed called, “formal mining sector“, this incident would never have occurred. Matter of fact, had it not been for this misguided action of a confused worker nobody outside our organisation would have known about the incidence. As a mining man, you would understand these things.

In support of my application, I have a Mine Managers Certificate of Competency, which I legally purchased when I was working on the Platinum mines in Rustenburg. A friend, employed at the DME’s office in Klerksdorp, will confirm it is kosher, should anyone decide to do checks.

There are currently about 1500 people employed in the operation, this number fluctuates since workers disappear in the “madala sites” from time to time, others just abscond, a cultural trait of my brethren that will never seize to amaze me, resulting in a need to recruit replacement which, as you well know is not so easy these days. Not with the lowly skilled and lazy riff-raff out there. It is also not possible to give you an accurate estimate of tonnage mined in the operation. We have learned that “grade is king” and we measure output in ounces only. I found that linking earnings to ounces, I get better performance and we do not need “hangers on”, such as surveyors and grade controllers.

I believe my experience can add substantially to the body of knowledge of your esteemed organisation. The nature of our operations necessitates unorthodox methods and entrepreneurial thinking, which can assist people like you and I to reverse the shrinking trend that besets our industry. The fact that we are successfully mining in areas, abandoned by the formal mining sector, proves beyond any doubt that we have a working model.

Areas of operations in which my knowledge can be of particular importance is training and multi-skilling of employees, most of our people are skilled in the entire value chain, from exploration to final product. We have people in our employ who specialise in logistics, a particularly daunting challenge if you consider workers live underground for extended periods, quite an achievement since we do not have the luxury of hoisting facilities as you know it. I always say, “We find, we mine and we process”.

Although we are not bound by DME rules and even though the Minister denies us our constitutional rights to make a living, we do take safety seriously. Excluding the unfortunate fire that resulted in the so-called, “Illegal Mining Disaster”, we have been doing very well in work place safety, with our safety record improving every year. Last year we had an estimated fifty fatalities and this year, excluding the fire deaths, we had only forty. The real improvement can be seen in the number of amputations reported. It came down from 150 last year to an estimated 90 this year. These numbers, I can assure you are correct. My son, who passed Mathematics Literacy at school, is the chief statistician for the company and he can teach you a lot about statistics.

I will also contribute my experience in the in safeguarding of investments against the likes of Jelly Tsotsi Malema, his Buti Malemela and Ballcrusher Vavi with their plans for a hostile takeover of the mining industry. We have established tried and tested defense systems against this type of hard-line guerilla tactics. Our people had training from the best in anti-insurgency and defensive warfare, which we adapted for underground conditions and include the use of grenades, anti-personnel mines, deadly gas, not to mention guns, that’s right, we are the reason the President can’t find his machine gun…we’ve got it. We do not use guns too often underground, only in close combat; ricochets can be dangerous in that environment, whilst poisonous gas, ingeniously used with the ventilation flow, is very effective.

Cynthia Carroll will vouch for us on this one, I recently advised her on defensive systems against the threat posed by that Swiss company with the funny name and Swiss Army Knives as main weapon for “hostile” mergers. We know how devious the Swiss can be. War after war they pretend to be on the fence just so they can lay there frostbitten hands on the gold. It will not surprise me in the least to find they swindled the poor Paul Kruger out of his gold, for all we know the Kruger Millions have been stashed in a UBS vault, in Zurich all the time, whilst treasure hunters are running all over the Mpumalanga countryside looking for gold . It is also quite conceivable that Paul Kruger set this up all those years ago to take revenge against Anglo, whose founding fathers, were in many quarters considered British agents and conspirators in the oppression of the “Boere”.  

I can tell you a lot more, but I’m sure you get the picture. I’m looking forward to the many opportunities, we will have to chew the fat, or shall I say chew the Crayfish, whilst drinking copious amounts of John X Merriman and Blue Label at those famously wild monthly meetings I heard about.

Yours in Safety

Sticksaait Chugumisa

Kill the Company…Kill the Job

Living in a country governed by slogans, we may as well join in. My contribution, “Down with Work…Give me Money”, seems fitting enough amidst rising unemployment and an increase in unrealistic wage demands.

The South African economy, which was hailed as relatively unscathed by the global financial crisis, according to vote hunting politicians as recently as three months ago, when Trevor Manuel denied South Africa was in a recession, miraculously imploded. This rapid collapse must therefore be quite a shock to the naïve believers, arc-optimists and proud carriers of good news stories. In the last few weeks “no recession” became the worst recession in years, manufacturing output dropped dramatically, mine output dropped and South Africa became a net importer of food.

The three biggest employers after the state are struggling to remain competitive and jobs are being lost at alarming rate, making the Presidents promise of 500 000 new jobs by year-end meaningless. With nearly 200 000 jobs lost in the first five months of the year, the target, sucked out of our President’s miracle producing thumb, must now be seen for what it is, another empty and unattainable promise. It will require very creative mathematics to get to the target. However, with the “Math Literacy” skills, combined with the warped logic displayed by “nieu-economists” in the ANC government, we could end up with an interesting and surprising claim to success come year-end and time to account.

All the job losses in these critical industries are conveniently attributed to the global economic crisis, obscuring the fact that our unemployment woes are entirely attributable to misguided economic policy and mismanagement. The mere fact that the South African economy was outperformed by most emerging economies in the years prior to the “Great Global Economic Crisis” bears proof. The gold mining industry, which, at current prices, should be booming but because of high costs, it remains marginal, output continues to fall and with it jobs. Volkswagen, whilst announcing cutbacks in South African manufacturing are opening new manufacturing facilities in India. Commercial farmers, whilst selling farms in South Africa for coastal residential development, are increasing production of products such as sugarcane elsewhere in Africa. The employment of domestic servants is falling rapidly. I can site many more examples.

Why is this happening? The problem must be laid at the feet of the ANC government and its partners COSATU and the SACP. Our employment woes can be attributed to laws, regulations and policies related to labour, land ownership and mineral rights and the insecurities arising from it. To complicate matters the emphasis on decent meaningful jobs has given rise to the perception that gardening and house-work are inferior jobs which, combined with regulated and unrealistically high minimum wages, resulted in a large number of job losses. People who used to earn R1800 per month plus accommodation and food are now lying idly about, doing nothing but breed in order to increase their share in social grants. Whilst people are retrenched and companies go belly-up, trade unions are encouraging their members to demand wage increases,  in most cases, considerably higher than the current inflation rate, with no prospect of improved productivity.

The president of NUM, Senzeni Zokwana, recently stated unequivocally that the unions do not strike at the drop of the hat, this whilst they were holding a gun against the heads of the employer leaving him little option other than to capitulate and hope for a miracle. So much for Zuma’s pre-election call on his supporters to follow the example of unemployed “poor white” Afrikaners, who after the great depression, took their picks and shovels and worked for a pittance. Instead of following basics, the government will proudly point to their prize-winning job destroying social plan which makes South Africa proportionally the highest payer of social grants in the world, not realizing this is one of the evils causing our high unemployment and low productivity levels. Their misguided and warped sense of depravity, results in the firm believe that social spending equals upliftment. Any intelligent psychologist worth his salt will tell you social hand-outs in most cases discourages the will to work, not that some of the unemployed and even employed need too much encouragement to lie around idly at home. Some would say certain people would strike, kill and wreak havoc for the opportunity to be unemployed. This brings me to the next, and certainly, the main reason for South Africa’s employment dilemma.

COSATU, whilst people are wallowing in misery, are instigating the destruction of jobs by demanding unjustifiable wages. To them it is not about the protection of the worker, it is all about doing less for more. It was therefore rather almost laughable when that brilliant economist of our time, Zwelinzima Vavi, solemnly declared, in an interview yesterday referring to people losing jobs, “COSATU are standing with you in this troubled time”. Pity they do not stand with the unemployed masses, the “worthless” people out there that have no hope of ever working as a result of restrictive labour practices forced on the economy by the government and COSATU.

My call on those union members who lost, or will lose their jobs, think back and count the hours and days lost by the company you work(ed) for as a result of your right to strike. As you count those days and hours, realise this; those were nails in the coffin of a dead or dying company. Many of you are probably delighted with your retrenchment package, which will enable you to lie around at home, drinking beer. Soon however, the money will be gone and you will be in the same leaking boat as your unemployed, starving neighbour. When you start to suffer the hunger pangs, and your family and begs for food, when you turn a darker shade of black because of your malnutrition, spare a thought for those loyal workers who worked when you and your union friends were wreaking havoc on the company and the economy in the name of your inalienable right to strike. Once your confused mind and empty tummy, allows you to make sense of the suffering you brought on those dear to you, go to Mr. Vavi and thank him for what he did to you, your dear ones, the country and the economy. I doubt you will have the guts to do that. Generally, your brevity and that of your ilk only exists when you are part of a mindless mob receiving suitable incitement from the likes of the Vavis of our world.

Illegal miners – Unsung Heroes

                  

The President of the Association of Informal and Illegal Miners of SA, Malaisha Kipastofile, called on the minister to enforce a code of practice that will ensure illegal miners can apply their trade safely. He was reacting to the minister’s call for a coordinated attack on the problem and her denial of their inalienable right to earn a living. Kipastofile said the reason for their activities must be laid squarely at the door of the government and the unions. He said the protectionist intent of the NUM and Cosatu has resulted in an out-of-balance labour market with artificially inflated salaries, causing large-scale unemployment and ever increasing job losses in an uncompetitive South African gold mining industry. Other mines will become targets when they, like the gold and diamond mines, become uncompetitive because of high cost of legal mining, which result in the willful and reckless abandonment of valuable in-situ gold resources. To the DME’s comment that the state will not carry the cost of the death of the illegal miners, Kipastofile said he was already in touch with Richard Spoor and the Associaton will sue NUM, The State and the Company for damages. Kipastofile further declared his intention to form a Union representing the unemployed. He said, we do not care about meaningful, and decent jobs, we just want jobs and pay so that we can feed our families.

 When told about the views of the Association of Informal and Illegal Miners of SA (AIIMSA), the spokesperson for the National Union of Mineworkers, Mina Kokomoya, said Kipastofile was a counter-revolutionary with ties to the security establishment of the old Apartheid regime and a cohort of Willie Madisha COPE. Kokomoya added that NUM would demand subscription arrears for the deceased miners since they were working on a mine where NUM has an agency agreement, which compels workers to become members of NUM. The union will however, not entertain claims against the Union by deceased illegal miners or their next of kin. Kokomya vigorously denied the accusation that Unions in general and NUM in particular were destroying employment opportunities. He said, “It is better to die like dogs than to work like slaves” He said he knew for a fact that at least 80% of the unemployed agrees with NUM on this issue.

 In a separate statement, Slack Notsosmart, COSATU spokes person, warned anyone contemplating the formation of organisations opposing COSATU of grave consequences. He said COSATU will not tolerate interference by non-workers in employment matters and threatened mass action in support of the wage demands, the banning of labour-brokers and subversion of the social dream. This tragedy of illegal miners must be laid at the door of labour brokers who undermine union efforts to uplift workers thereby promoting capitalist market myths. Asked about COSATU’s alleged intimidation tactics, Notsosmart said allegations of intimidation during any COSATU industrial action were perceptions created by the white owned media.

Leading economist, Adam Smith, believed that this tragedy could lead to a fresh look at the sustained viability of South African mines and could signal a reversal in the sagging fortunes of the South African gold mining industry. “This could provide us with an alternative model to extract gold from deep ore bodies”, he excitedly said.

A mining industry spokesperson, Tyranny Fortune expressed his admiration for the efficiency of the illegal miners and said, “Their commitment to the task ahead should be a lesson to all. Their ability to remain underground for long periods gives new meaning to the expression. “sleeping on the job” and the management are examining the possibility of applying this principle to current operations”. He added; “This is what we had in mind when we first thought about continues operations.” Fortune denied that the mine owners were discussing off-take agreements with the illegal miners.

The national director of Lawyers for Human Rights, advocate Jakob van Esel bemoaned the fact that the illegal miners, known as zama-zamas, had to recover the bodies of their colleagues themselves. He questioned the commitment and so-called bravery of Mine Rescue Teams and referred to them as ninnies for not volunteering their lives to safe the illegal workers, it is not that they are oppressed like the Emergency Workers currently on strike. The striking workers have the right to refuse assistance to the malingering elite, accident victims, who probably contributed to the situation they are and innocent victims of violent crime, committed by the oppressed poor. Unlike the striking emergency workers, the Mine Rescue Brigades consists of volunteers and have no real right to refuse laying their lives down for the oppressed illegals.

It is believed that the Inspector of Mines issued the illegal miners with a Section 54 order, which could result in a suspension of operations of at least 48 hours. It is also rumoured that the incident may result in a “DME Blitz” on Harmony operations. NUM are debating whether they should call for a 24-Hour sympathy stay away at Harmony operations.

Mudblasts

* According to Mike Cutifani, CEO of AngloGold Ashanti, South Africa experienced  an unexpected fatality stoppage, a brief strike by drillers, a slow resumption of operations after the Christmas break and some technical difficulties — nothing particularly surprising or to be worried about. South African operations will be affected by the usual swathe of public holidays over the Easter period

Maybe that is exactly the problem. Everything normal and nothing to be worried about. Why don’t you just shut it down? If the government and the workers do not care, why should management and the investor care?

 

* Cutifani also stated that no greenfields exploration is being undertaken in South Africa and the country’s mature gold mining industry continues its steady decline.

Mine killer, job destroyer. I wonder what the Vodafools think about this lot. Selling the “crown jewels” to foreigners. I do not think they need to worry too much. The South African operations will be given back to South Africans through some BEE deal that will leave everyone poorer. The Minister probably thinks it has something to do with Cynthia Carol’s goodwill.

 

* Nick Holland , CEO of Goldfields, stated recently that Kloof reduced fatalities by withdrawing from remnants

Another one? Is he telling us the strategy is to withdraw until nobody is left underground? Surely, he does not believe that, not in this land of opportunity. Imagine, No work, no workers and no risk. It sound like a pretty good growth strategy and it should make the government and unions happy

 

* According to Holland, the future of Goldfields’ SA operations relies heavily on South Deep and the adjacent Kloof reserves.

This is becoming hard to swallow. Maybe South Deep is one of those visionary dreams, high on promise and low on delivery. By the time they have figured how to turn the rich promises to account, pigs would have learned to fly. Mind you, with the Mvhela stake in Goldfields and with Tokyo’s self-confessed connections with the witchdoctor fraternity, nothing is impossible. A bit of mumbo-jumbo and hey, flying pigs everywhere

 

* Harmony CEO Graham Briggs said, “We have positioned the company in such a way that we are able to deliver on our promise of paying a dividend in future. Our focus now remains on achieving our overall targets and delivering consistent returns,” he said. This after the March share placement, which followed on from an earlier share placement in December through which Harmony raised R979m.

You know a miner is in trouble when he says as little as possible about his operational performance whilst waxing lyrically about his ability to mine the stock market and then in a spell bounding display dazzles his audience with elaborate plans for the future.

 

*  It is termed a civil war but the squabble for control of Diamond Mining Giant, Rockwell Diamonds is nothing more than a childish scuffle between two parties with different opinions on how best to mine the Securities Exchange, with no concern for the small investor. 

At the end of the day, Rockwell Diamonds, under present market conditions, are probably worth as much as the glowing PowerPoint presentations of its magnificent prospects. The mammoth battle between the famous, some claiming to be famous, some inconsequential and the odd reject claiming fame, is rather absurd. As the combatants (Bristow, Bristow and Copeland  on one side and  Von Weilligh, Reynolds and Van Wyk on the other side) square up for the fight that will destroy what little value remains in the company, spare a thought for the employees and the small investor.

 

* Senzeni Zokwana, President of NUM said; “This marginalisation of women in general and black women in particular not only impacted negatively on the role of women in economic activity but further entrenched their exclusion in the different sectors of our economic landscape .This marginalisation inculcated cultural and gender stereotypes which victimised women particularly in the mining sector .In this regard entrenching the hegemony of male chauvinism in all layers of employment in the mining industry.

Now, many years on, and having had woman minister after woman minister of mines, one ending up as deputy president, and a woman CEO at the helm of Anglo, the mining industry are still miles of the target. Maybe the appointment of a new minister of mines and a minister to look after woman rights will bring fresh ideas. Maybe the Gauteng Premier inadvertently pointed the way forward when she pleaded for open minds on the decriminalisation of prostitution.

This triggered my imaginative mind and I thought of the great Senzeni Zokwana’s wise words; “black men believed also that women must remain in the rural areas or in townships while they dived and descended further into the curse of production in the dark bowels of the earth which have never been hospitable even to the male folk”. Now, if that is a not plea by leaders to make it attractive for men to have woman “on the job” with them, so to speak, whilst their wives are tending the fields, I do not know what it is. If sex is allowed, decriminalised underground in a manner of speaking, the industry will fill their quotas, we’ll clean up the streets by literally driving prostitution underground. It could even solve the skills problem. We’ll have a generation of people, conceived underground, who will unlike normal youngsters, take to mine work like ducks to water. The historic and traditional aversion to work, especially underground work, will cease to be a problem.

Death of an Industry

The bankruptcy of Pamodzi Gold is symptomatic of the dying South African Mining industry. With diamond mining reduced to the level of 19^th century prospecting, scratching for a livelihood and the mighty De Beers, once prosperous and in total control of their destiny and market, now technically insolvent. The gold mining industry in South Africa with technical problems and challenges, are unable to find investors to start new mines. The platinum mining industry is struggling to maintain profitability in a realistic market environment. It is littered inefficiency, with BEE deals and unsustainable “mining ventures”.

Using the Pamodzi example and a bit of forward thinking I see Sentula finding a partner who will invest money to buy the “assets” at a rock bottom price. They will inject some working capital come up with a plan promising a pot of gold and raise more cash from the market. Mining will recommence the company will make losses but promises of future profitability will suck in the gamblers and the price of the stock will increase. A few people, mainly  management, investors and the astute dealers will make money, probably lots of it, however many people; greedy people, poor people and stupid people will loose money. Some will loose a little and say nothing to save them the embarrassment; others who lost a lot will kill themselves. When the mines reopen the unions and workers will rejoice. The Minister will laud the businessmen for showing confidence in the South African economy and the BEE partners will toast everyone for their contribution in making the rebirth of the mines possible. Being increase time the workers will embark on a strike for more pay. During the subsequent strike, management, under pressure, to keep the marginal operations going and to protect the revived baby from harm, brings in contractors to minimise disruption to production. This results in anarchy and the killing of a contract labourer by the strikers, causing the mine to grind to a halt. After severe financial losses, operations restart but a comrade dies in an accident and the workers down tools in sympathy. By now, the projected margins are paper thin or non-existent. A week later inspectors of the DME arrive for a “Blitz”. They find a worker not wearing his Rescue Set and issue a section 54 order. As a result, operations are generally suspended for 24 hours or more. The Mine Manager, a caring man, because of the stress and the threatened permanent closure of the mine dies of a heart attack. The mine in this period produced gold. Unfortunately, it was produced at a loss and no value was generated. The people who made this miserable tale possible will walk away. They will blame the markets but nobody will bother to deal with the real issues. During this time, five people died in road accidents and thirty people were murdered in the areas in which the mines operate.

Who would invest in such a venture? It is better to invest your money in a decrepit sewage plant gushing raw sewage into the Vaal River. At least the technology to clean human excrement is readily available and no one will call you a killer of people.

It is almost inconceivable. We are witnessing the demise of the South African gold mining industry. One of the two pillars that supported the South African economy for more than a century are crumbling right before our eyes giving rise to the obvious question; Why now; with the gold price at its highest level in 20 years? How do we allow an industry to die when we still have some of the biggest gold resources known to man? How do we stand by and see thousands of people losing their jobs in a country with the third highest unemployment rate in the world?

The reason for this is simple. Economics and the market. The cost of mining gold and the resulting lack of profitability of the business do not justify its existence. We all know that, or do we? Many do not realise the simple principle that the lack of profitability and resultant lack of competitiveness can, and will kill an industry. Conversely, and here is the dangerous part, many “leaders” who are aware of the ills of the industry, do not speak about it because it is not politically expedient to do so. I read an article in the M&G recently about a mineworker who religiously monitors the platinum price on TV. To him the price determines his continued employment or otherwise. The concept of profitability does not enter in the equation.. The sad reality is that he is only one of 400 000 mineworkers who hold this belief, people who believe that the mine owners set the price of the commodity they produce. Four hundred thousand mine employees do not know that cost has a telling effect on operations and they do not understand the factors impacting on cost. They only understand the “Market of Economic Myths” espoused by their leaders.

The terminal illness afflicting the gold mining industry stems from the nature and depth of our deposits. As a result, gold mining in South Africa, is technically complex. That should not be a problem. It took us one hundred years to get from reef outcrop to 4000 metres, a magical achievement. In the last 20 years, despite the increasing rate of technological development, we have gone nowhere because there was no money to develop technology Developing technology requires skills, expertise, investment and passion. The South African mining industry was built by hard work; the blood, sweat and tears of true pioneers. It was built by people prepared to take big risks in order to reap a well earned reward. Most of these attributes are now nowhere to be found. Skills fled, because of falling productivity, margins are paper-thin. The prevailing mood around the industry are characterised by a reluctance to face the truth, avoidance of tough decisions and a false sense that somehow a miracle will happen and all will be well. Today the culture in South Africa has changed. We must avoid risk, keep hard work to a minimum and reserve competition  for the sports field. Rewarding risk is politically incorrect, everybody have rights, privileges cannot be earned and should you by chance have skills or knowledge that, in the opinion of some, has been acquired unfairly, all efforts must be focused on avoidance of the effective use of that skills and knowledge. We live in an environment where people demand to eat eggs without breaking the shells. As a result of this madness, we have not seen any major gold mining project since the early nineties. Gold mining companies in South Africa are marginal and struggling whilst global companies operating in competitive market environments contain costs, maintain margins and deliver good profits. Barrick, Newmont and Randgold Resources are doing well whilst past have fallen onto bad times. The former king of gold, Anglo American, sold its gold division, Goldfields are struggling and the South African number three, and Harmony is a marginal miner. For the rest…nothing. South African gold production in 2007 was one third of levels in 1978, but more significant is that the period 1993 to 2007 accounted for two thirds of the wipe, certainly a rapid shutdown. Before we can even think of fixing the industry, we must face and understand the brutal truths facing us:

• Mining has always been a risky and hazardous, so is motorcar racing and policing in South Africa. I am yet to see the SAPS strike every time a police officer is shot in the line of duty and many racing car drivers pay good money to put their lives at risk for the spectators. I can safely say it is more risky to just live in South Africa than working in a deep gold mine if you consider that the life expectancy of South Africans have dropped from 65 to 51 in the last fourteen years. For gold mining and mining to survive in South Africa, people are going to die.
• Labour cost globally, and in competitive countries unlike in South Africa, are driven by supply and demand. Here, with abundant labour at our disposal we restrict employment through counter-competitive measures such as legally entrenched labour practices and unrealistic minimum wage levels. Artificially elevated wage levels with high unemployment are preferred to a market related living wage with low unemployment. People are going to have work harder for less.
• Institutionalised laziness promoted by trade unions and political leaders in the name of ideology. The deliberate destruction of employment opportunities by declaring certain types of work as meaningless and undesirable, resulting in people resorting to crime rather than work. The power of the Unions will have to be broken.
• A development fund can be created to develop the future and to allow our children to benefit from our resources, a reserve similar to the Norwegian Oil Model.

The Unions use safety to score points with members. They prey on the ignorant by portraying themselves as fighters for the poor and oppressed. In the process they keep their membership high and prevent the entrance of competitive alternatives

The CEO of Goldfields stated recently that Kloof reduced fatalities by withdrawing from remnants. Is he telling us the strategy is to withdraw until nobody is left underground? No work, no workers and no risk. It sound like a pretty good growth strategy and it should make the government and unions happy. Nic Holland, the hero killing all those meaningless jobs. Whilst researching and writing this, Anglo Ashanti results was published and CEO Mark Cutifani, in a very blasé manner of handedly fashion, painted a bleak picture for the future of Anglo Ashanti’s South African operations.

To return the gold mining industry to a growing industry we need commitment to profitability. Profitability will encourage investment in green fields projects and R&D. However, no amount of money will prevent the loss of life in the quest to conquer depth and nature. Maybe we need to be reminded of the number of people who died during the construction of the Panama Canal, the Hoover Dam and the conquest of space through space travel. Today we want to forfeit less whilst earning more than our predecessors who died to get us to 4000 metres underground.

Could This Possibly Happen

 

Sqhwehle Masondo, newly appointed inspector of mines in the Rustenburg area was driving back to the office after his visit to one of the platinum mines. He felt satisfied, he has done well for himself. Twenty-six years old, four years since the completion of his studies and he was an inspector of mines and he got their quicker than the people in the old days used to do. Today was particularly satisfying. He issued a Section 54, not that there was a particularly life threatening situation, but because he could and he thoroughly enjoyed the look of shock on the face of the arrogant asshole of a manager.

Walking into the building housing the DME offices he proceeded up the stairs. Halfway up the first flight of stairs, one of the many loose tiles caused him to stumble resulting in a sprained ankle and twisted knee. With great difficulty, he hobbled to his office.

Needing to fill out a preliminary injury report, he switched on his computer and plugged the printer into the wall socket, torn out of its box and suspended only from the electric wiring leading to it. As he pushed the plug into the socket, he felt a sharp shock and jerked away from the socket as if a snake bit him. This action resulted in him bumping into the filing cabinet next to the electric socket. The stack of files on top of the cabinet tumbled onto him, causing him to fall backwards. A wood screw, protruding from a piece of wood which somehow became detached from a wooden desk a few days earlier and now lying on the floor, penetrated his anatomy between his scrotum and anus at an angle resulting in the screw imbedding itself next to and in touch with Sqwhehle’s prostrate. In the process, he also knocked his head against the side of the desk, rendering him mercifully unconscious.

Sqhwehle regained consciousness as the paramedics arrived and proceeded to prepare him for stretcher transport. With him lying on his back, the paramedics were not aware of the screw imbedded in his anatomy. As they started moving him, the movement of the screw resulted in excruciating pain but also an immediate erection and orgasm every time the screw moved against his prostrate gland. The paramedics strapped him to the stretcher and could not understand the screams of pain interspersed with howls of ecstasy coupled with a happy, but also agonised expression, on Sqwhehle’s face. They started carrying him down the stairs on the stretcher. The procession was almost halfway down the stairs when the front stretcher-bearer’s foot hooked in the cavity left by a missing tile causing him to fall and tumble head over heals until he came to rest on the landing at the bottom of the stairs where he lied prone with his neck twisted at an unnatural angle. When the first stretcher-bearer fell, the rear bearer lost control of the stretcher and the stretcher containing the unfortunate Sqwhehle bounced down the stairs, resulting in waves of agony and ecstasy wracking the unfortunate Sqwhehle’s convulsing and battered body. When the stretcher reached the bottom of the stairs, the leading end rammed into the ribcage of the first stretcher-bearer. The momentum of the stretcher caused it to cartwheel twice, each time bouncing Sqwhehle’s head on the floor rendering him unconscious once again. The stretcher finally came to rest against a wall. Sqhwehle had blood streaming from all the natural orifices in his head as well as from some openings that weren’t there before.

Just then, Krappies Bothma, acting principal inspector, twice retired and now working as a contractor to complete the mentoring he was supposed to have done during his previous tenure, walked into the building and was confronted by a very dead-looking paramedic and a bleeding and unconscious Sqwhehle. Krappies’ eyes locked on the jerking body of Sqwhehle and he just shook his head. Funny, he did not look particularly surprised.

To cut a long story short, the paramedic was pronounced dead and Sqwhehle, because of brain damage, will suffer from spastic convulsions for the rest of his life. This should not be too awkward since he has had a nervous twitch since the day he fell of the train roof whilst he was train surfing on the Soweto-Johannesburg line.

The Minister expressed her sympathy with the victims and re-iterated the need to reduce mine accidents. She called on mining companies to take safety seriously. She made the point that the poor attitude demonstrated by the owners and management in mining industry, causes unfortunate accidents such as this unfortunate incidents. The President of NUM called for a stay-away in the Rustenburg area to show solidarity and to make mine owners and mine management aware of the risks facing mineworkers.

The CEO of the mining company that caused this terrible accident expressed his condolences with the family of the deceased and promised the companies’ support for the family of the injured. He stated that the stakeholders must work together in their attempts to create a safer environment. It was announced the following day that he decided to accept a position as CEO of a mining company in Australia.

 

Note: Any similarity to real people, situations and occurrences referred to in “Could This Really Happen” are purely coincidental. If you find the story getting to close to home, do not worry, it is set in a South African environment after all.

The Mean South African Killing Machine

The poor safety performance of the South African mining industry is often compared to mine safety performance in developed countries, such as Australia, Canada and the USA. These comparisons show that an individual working in a mine in South Africa is eighteen times more likely to be killed than a person employed ion a mine in Australia. It also shows that we are ten times more likely to be killed while driving to work than our Australian counterparts, while the likelihood of being murdered before getting into the vehicle is 60 times higher. In spite of these alarming figures, I have not heard calls for draconian fines and imprisonment for Ministers, Government Officials or others responsible for Transport, Road Safety and Safety and Security such as those that have been suggested for mine owners/managers. To the contrary, some of the government ministers accountable for these departments seem to be gaining in stature.

On the other hand, pity the mine owners and operators who face draconian penalties if a miner suffers a fatal injury on the job. Which raises an important question – How will the call for the imprisonment of owners and/or management prevent accidents that are in most cases the fault of employees who come from an environment where the population at large has such a lax attitude towards safety and risk?

If this is the status quo in society at large, why should we be surprised when we hear about another mine death?  What is surprising is the denial of any responsibility or accountability for any accident or injury of any kind by the workers’ representatives, in particular the NUM. Workplace fatalities are singularly attributed to the behaviour and attitude of the owner/management’s,” profit  above everything’’ motive. Seldom, if ever, is the outcome of the official investigation into the fatality given anywhere near the same attention, which indicates that the reporting of such incidents has become emotional and not analytical.

Because of these relentless attacks on management and mine owners, we have reached a situation where the call by unions for draconian measures- such as exorbitant fines and imprisonment- are actually considered by the Minister. Any reasonable person will accept the suggestion of drastic measures against anyone found to be negligent. This rule should however, not only apply to management; it should also apply to workers who cause injury or death to themselves and others. Perhaps a worker, killed as result of his own risk taking or negligence, should forfeit any insurance payouts to his family. A draconian measure? Most certainly, but so is putting a person in jail because someone died on a mine for which he carries overall responsibility yet cannot control the behaviour of irresponsible employees. As it stands, mine owners have taken drastic measures against senior executives in response to poor safety performance. Do we need to be reminded of similar threats to managers during the nineties when it was suggested that Mine Health and Safety Act be amended to hold managers guilty until proven innocent, a legal principle not applied to the vilest of crimes in society.

What is largely being ignored in the media and in the public domain is the simple fact that Mining is inherently risky. Deep level labour-intensive mining as practiced in South Africa is particularly hazardous and the best way to make these places perfectly safe is to stay the hell out of there and opt for subsistence farming. The main risk attributing factors are the physical operating environment, which include geological features, geophysical and geothermal factors. Other, often more critical and manageable factors include; skill, culture and behaviour of employees (including management, supervisors and workers) and finally engineering factors such as machines, chemicals and tools.

The impact of people factors, including experience, training and culture, on our poor safety performance, are largely ignored and are therefor not adequately addressed. The South African mining industry, operates in one of the most challenging mining environments in the world, and does so with a poorly equipped human resource pool. Even the Chinese with their atrocious mine safety record, are able to draw from a higher worker skills base to operate their mines.

The South African mining industry spends more than anyone else in this country on training and education and it is in these areas that government and labour can contribute greatly by becoming party to them. It is however important that their participation is based on a genuine desire and not the political agendas and ideology of a few individuals. The role of government should be that of coordinator and legislator, while labour should assist by campaigning for the freeing up of funds tied up in ineffective Setas and assisting mine management in setting up workable and effective training programmes. Establishing such proper training will contribute much more to mine safety than astronomical fines and criminal charges leveled against mine management.

The South African safety culture issue is very well illustrated by an observation whilst driving from Pretoria to Rustenburg a while ago. Driving past an informal settlement I could not help but noticing some peculiarities, maybe that is not the right way to put it, it would have been peculiar if I were driving in most other countries. Majakaneng is separated from the highway by a concrete fence constructed on either side of the road to prevent inhabitants of the settlement from crossing the road in an unsafe way or at an unsafe place. Two pedestrian bridges and two multi-purpose, (car- and pedestrian) bridges have been constructed as safe “crossings”.  Everything seemed normal until I noticed the gaps that have been opened at a number of places along the fence.  Making these gaps would have required substantial tools and force. Some of them were made within fifty metres from the pedestrian bridges and people were crossing the road in the face of oncoming traffic instead of using the pedestrian bridges.

There can be little justification for such blatant high-risk behaviour.  In the first place the people doing this has to be just plain lazy.  The second reason could be that there is a lot of truth in the perception, “life is cheap” in South Africa.  A third reason is a culture of risk taking that can be linked to the “life is cheap” culture.  We see this behavior in many aspects of our daily life.  It is evident in the way we use the roads, the risks taken when people make illegal electrical connections to the power grid. We see it in schools where violence is the order of the day with children attacking each other with the intent to kill and the popular “Train surfing” in the township. South Africans do not value life and they show scant respect for lives of others.

Most of the people living in Majakaneng are employed by the surrounding mines and the person employed by a mine in the area is, most likely, the person that made the hole in the fence and took the risk crossing of the road.  I cannot think of any reason why this risk taker will change his behavior when he goes underground to work his shift.  He arrives at work daily, puts on his personal protective equipment, because it is visible and can be policed.  Unfortunately, he does not take off his undesired attitude to safety and risk when he is forced to don his hardhat and other protective equipment. We see risk taking and a total disregard for life beyond the workplace and the roads. Only in South Africa does people, diagnosed with Multi-drug Resistant TB (XDR-TB), escape from hospital to go home and effectively deliver a death sentence to family and friends.

The South African mining industry spends more money than any other South African industry on training and education. It is in training and education where government and labour can contribute greatly to the reduction of risk to life and limb in mines by becoming party to training initiatives put in place by the mining companies. It is however important that their participation are based on desire and not political agendas and ideology. The role of government should be one of coordination and legislation whilst labour should assist in pressurising the freeing up of funds tied up in ineffective Setas and assist management in setting up workable and effective training programs based on effective and valid analysis of industry needs. Establishing focused training will add more to mine safety than fines and criminal charges.

To continue to blame mine deaths on an owner/management drive for profit is mischievous and counter productive and impact negatively by shifting focus away from the real issues. The current approach by the unions and the DME, is one of the reasons causing investors to avoid and in some cases setting up escape strategies from South African mining. Mine owners, for many years, have been monitoring the cost of accidents and concluded that the cost of accidents erodes profit and impacts negatively on the image of mining as an investment option.  With current policy of labour organisations to stop mining every time a fatal accident occurs, it is a no-brainer to suggest that any mine manager/ owner will consider that mine deaths can have a positive impact on profit or any benefit at all. Every mine manager knows the cost of a one-day strike costs his company millions in revenue. Every mine owner and manager realises that mine injuries and fatalities does not only erode profits but will eventually close mines down. It is therefore nothing less than callous provocation to suggest people are killed because of a profit motive of owners and management.

In the mean time, I suggest the South African mining industry get rid of their masochistic characteristics and low self-esteem. I refer of course to an article in the Sunday Time a while ago when, Chris Barron, in the Business Times, asked the question, “Why do South African mines have the worst fatality rate in the world?” This question was not answered by the interviewee. This immediately created the perception that Barron expressed a fact and Mr. Mine Safety agreed. In reality, South Africa does not come close to the worst mine fatality rate in the world. In the interview the interviewee, a safety manager from Angloplats, went further and explained that their new CEO brought a new and improved attitude towards mine safety, suggesting that South Africans are not up to the task. Maybe Mr. Safety should be reminded how many South Africans run divisions of large global mining houses and low and behold, even entire global mining companies. Maybe in his world BHP Billiton, Xstrata, Rio Tinto and Barrick are considered small.