The killing of 42 South African rock drillers and the wounding of 78 others at Lonmin’s Marikana platinum mine has sparked fears that similar violent confrontations may spread to other parts of the mining sector. The rock drillers were striking in support of a wage demand. Two policemen also died.
Steve Phiri, Royal Bafokeng Platinum CEO, says rock drillers at the Bafokeng mine have already put forward a demand for more pay; Anglo American also reports a similar situation at its platinum mine.
‘‘Just the start’’
Analysts say that the unrest may not be limited to the platinum mines, but could spread to the coal and iron ore sectors. The strikers are members of the emerging Association of Mining and Construction Union (AMCU), which is seeking to outrank the long-established National Union of Mineworkers (NUM). The NUM has warned that its feud with ‘‘militant upstart’’ AMCU could spread.
“These serious, serious issues affecting the platinum sector could spread to the industry as a whole,” Phiri says. There is also the belief that labour protests are becoming more violent. “There has been a strong and steady escalation since 2005 in the level of violent behaviour during strike activity,” one analyst said. “This is just the start,” said another.
Development plan follows SIMS
Barely a month after the ruling African National Congress (ANC) discussed the report on State Intervention in the Mining Sector (SIMS), South African President Jacob Zuma was handed the final version of the country’s National Development Plan to 2030 (NDP30). Both make clear that the mining sector must underwrite overall national growth. NDP30 promises to improve the “poor infrastructure and regulatory and policy frameworks” that have hindered investment in the industry.
“Improving transport and energy infrastructure and providing greater policy and regulatory certainty to investors will enable the mining sector to deploy the skills, resources, know-how and capital and allow Government to raise much more tax revenue than it does at present,” the plan says.
NDP30 says investment in the coal sector should be prioritised. First should be a new coal line to unlock deposits in the Waterberg region, but extensions to existing lines in the central basin and an upgrade of the line to Richards Bay coal terminal (RBCT) should also be included. On the downside, it suggests that coal exports be restricted in quality and quantity, something power generator Eskom has been lobbying for. “We must ensure the security of the supply to existing power stations through industry contracts, more comprehensive planning and by opening up the Waterberg,” the plan says.
Sacrifice for change
The plan calls for short-term sacrifices, which it says will result in long-term benefits. Export-led economic growth needed to exceed 5%/year on average and would focus on mining. Transforming the economy would require changing patterns of ownership and control. “To date, efforts to transfer ownership of productive assets have not yielded the desired results,” the plan says. “The Government will have to ensure that skilled, technical, professional and managerial posts better reflect the country’s racial, gender and disability make up.”
It must broaden ownership of assets to historically disadvantaged groups through programmes such as affirmative action and more effective Black Economic Empowerment (BEE).
The plan questions current policy to develop a nuclear power baseload: “This could call for an unprecedented level of investment. In-depth investigation into the financial viability of nuclear energy is vital.”
International miners are watching anxiously as support for resource nationalism increases throughout Mongolia. Long-time resource nationalism advocate, Davaajay Gankhuyag, has now taken control of the Ministry of Mines. Gankhuyag wants to prevent any foreign investment in Tavan Tolgoi, the world’s largest undeveloped coal deposit. There is already a law prohibiting foreigners from owning more than 49% of any mineral resource or mining operation.
There are increasing fears that Mongolian resources are being coveted by China. Tavan Tolgoi is close to the border. China has already bid to take over Mongolian miner South Gobi resources, but is meeting strong resistance from the Mongolian Government.
A Bill before Parliament says holders of mining rights must use-or-lose them and sets minimum investment levels. It also wants the Government to be able to cancel rights to minerals listed as strategic, but not-yet defined, and reoffer them via auction. The Bill is sponsored by Senator Gem Argello, a member of the Brazilian Workers’ Party, which is a member of the ruling coalition.
Esperanza Bias, the mineral resources minister, has announced the acquisition of a 5% share in the Vale’s Moatize coal mine. She said it is now policy to hold up to a 25% interest in all mining enterprises. The Government now intends to acquire a similar stake in Rio Tinto’s Benga project.
China slow down costs jobs
BHP Billiton Australia’s six coal mines in Queensland, which supply up to 20% of the world’s traded coal, are scaling back a 10,000 strong workforce as demand from China continues to slow. China cut its own coal output against last year, citing slowdown in economic growth. The 2012 target is 3.65 billion t, an overall increase of 3.7% on 2011, but with cuts from inner Mongolia and Shaanxi at 7%, those for other regions less.
US export records
US coal exports are aiming for record highs as power plants burn more natural gas and release more coal for export, most of which is being shipped to India. US producers Booth Energy and River Trading have signed new contracts to supply 9 million tpa to India’s Abhijeet Group.
The US has introduced legislation to force US-listed mining companies to reveal payments they make to foreign Governments, including those for drilling or exploration licenses “to reduce the risk of bribery and corruption”.
Written by Barry Baxter.