Deputy President Kgalema Motlanthe – Mining impact on the form and content of our history

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The shape of the current South African socio-economic landscape is the reflection of the turns and twists of the mining history as well as the totality of colonial relations preceding. It is impossible to think about mining in South Africa divorced from these systems of colonialism and apartheid which shaped its labour force, work organisation, infrastructure and culture.

Mining impacted on the form and content of our history as our nation assumed a distinct and sovereign geo-political expression. Of note is the fact that the advent of mining engendered the conjuncture of modernisation, revolutionary politics and racial domination, the inter-relationship of which was, in time, to create the face of South Africa as we know it today.

The discovery of diamonds in Kimberly in 1870 and subsequently, gold in the then Transvaal in 1886 triggered massive immigration into the country from Europe, North America and Australia, in ways that impinged drastically on the demographic and, with that, power dynamics in society.
It is common knowledge that imperial Britain eyed these economically tantalising developments with self-interest that would eventuate in the explosion of long simmering tensions between itself and the Boer Republics into the open. This culminated in the so-called Anglo-Boer War of 1899-1902, which, parenthetically, post-apartheid discourse has correctly re-labelled the ‘South African War’, given its effects on all our people, irrespective of the colour of their skin.

The result of this history-making war was the redrawing of the political boundaries of our country, sealed by the signing of the Treaty of Vereeniging in 1902, which ushered in the Union of South Africa in 1910. With the Union of South Africa the die was cast for the foundations of the political subjugation of black people in general and Africans in particular. The social contradictions within the dominant political camp represented by white workers and white mine owners in the latter part of the 1800s ensured that social consciousness among the workers is pronounced in a way that took a permanent if belligerent form.

Many of the immigrant workers had brought with them the culture of craft trade unionism as well as the politics of class-consciousness from their countries of origins. The roots of trade unionism in South Africa are to be found in these primal events that pervaded early mining developments in the late1800s, even though they were still racially defined.

Soon after the establishment of the Union government in 1910 skilled white workers formed the South African Labour Party to represent their interests in the body politic of the country. From inception, the South African Labour Party not only made a conscious decision to exclude black members but also colluded with the Chamber of Mines to keep the wages of black workers low as a matter of policy.

Dissenting from this position of the South African Labour Party that sought to reject class solidarity and racial equality, a few visionaries refused to sacrifice principle and succumb to expediency. These ‘dissidents’ broke away from the South African Labour Party and formed the International Socialist League in 1915. The International Socialist League was thus born of the principle of working class solidarity. Among its leading lights were men such as Bill Andrews, David Ivon Jones and Sydney Bunting, all of whom were born outside South Africa.

The International Socialist League was to become the Communist Party of South Africa in 1921, after a founding meeting by the Communist Party, the Poali-Zion, Communist Party of Cape Town, various Indian industrial unions and the so-called native workers unions among others. Driven by a modernist outlook, they could articulate the underlying relationship in our country between capitalism and national domination.

These realities helped define the main form and content of the workers’ class struggle at that particular historical moment. From this viewpoint we can usefully end up with the summation that the historical forces unleashed by the discoveries of both diamond and gold in South Africa were:

  • The ground-breaking social development under the rubric of capitalism led by the diamond and gold mines;
  • The generation of the first stirrings of revolutionary thought brought from the European, North American and Australian societies by waves of immigration;
  • The intensification of indigenous revolutionary consciousness as a result of expanding urbanisation and its attendant creation of large black working class;

We can therefore usefully attribute the social character of the present day South Africa, including its unique set of challenges, to this context of the history of mining. The question that arises inexorably from the foregoing is what the state of mining in post-apartheid South Africa is and, related to that, what is the government’s position thereof?

Since the transition to democracy in 1994, our common challenge has been to provide a supportive environment for the mining industry while at the same time ensuring that it contributes to a more equitable, inclusive and advanced economy. Despite some difficulties, the recent growth in investment, output and employment, suggests that we have begun to make strides, although we still have a long way to go.

The South African economy remains essentially resource-based, benefiting significantly from the contribution of mining. At the same time, the country has recently been confirmed as the wealthiest mining jurisdiction in the world, excluding energy commodities, with an economically exploitable life of more than a century. Our mining industry remains a “sunrise” industry, even after centuries of mining heritage.

Our vision is a mining industry that is growing, increasingly diversified, increasingly inclusive, and a growing stimulus for the economy as a whole. With our history in mind the 1998 White Paper on Minerals and Mining enunciated the international norm of vesting custodianship of mineral rights to State, as articulated in Article (2)(1) of the United Nations’ Charter of Economic Rights and Duties of States, granting States full permanent sovereignty, including possession and disposal over all its natural resources.

This position is further supported by the Constitution of South Africa [Section 24(b)(iii)] in terms of which the State is bound to take legislative and other measures to secure ecologically sustainable development and use of natural resources while promoting justifiable socio-economic development.

The Mineral and Petroleum Resources Development Act 2002 (MPRDA) recognises the mineral wealth as a national asset, a common heritage that belongs to all in South Africa and pronounces the State as the custodian thereof. This is further enunciated in Section 2(a) of the Act as it acknowledges the right of State to exercise sovereignty over the entire mineral and petroleum resources within the Republic.

We have since 1994 transformed the legislative framework through the enactment of the Minerals and Petroleum Resources Development Act drawing on international best practice in helping the country to realise a just value for extracted minerals, while at the same time allowing for private investment in mining. This framework, including legislation on royalties, ensures that the country is compensated for the permanent loss of non-renewable commodities through mining. It is a framework that comprehensively addresses the regulatory environment for the mining industry.

Following from this legislation we have seen meaningful participation of the previously disadvantaged people in the exploration and exploitation of mineral resources. As such South Africa’s mining industry is amongst the largest contributors by value to the Broad Based Black Economic Empowerment (BBBEE) in the economy. However more still needs to be done in other areas such as skills development, employment equity, community upliftment, improving housing and living conditions, beneficiation and ownership.

Contrary to the view that there must be less State involvement in the economy, the lessons from recent economic and financial crises corroborate our enduring position that more State involvement is sought to secure orderly socio-economic development of its citizenry. To this extent, the South African government endorsed the existing African Exploration, Mining and Finance Corporation (Pty) Ltd (hereafter referred to as AEMFC) as the nucleus for the State Owned Mining Company.

The AEMFC, as a State owned mining company provides a basis for greater and consolidated participation of State in mining, with a particular focus on ensuring security of supply of minerals of strategic significance, such as energy commodities (coal and uranium) and minerals that constitute input into the broader industrialisation programme such as iron ore, cost competitively and continuously.

The establishment of a State mining company is intended to compete on equal basis with other mining companies and compliment the resuscitation of the mining industry in the country, as private sector exploration investment has been steadily declining since the democratic dispensation, despite the quantified residual potential in the country. We can see the roots of the dilemma we face today in the structure of mining a century ago.

In 1912, mining contributed almost a third of the GDP. Gold alone accounted for two thirds of South Africa’s exports, up from virtually nothing in the 1870s. The major mining companies were well established, supported by a vigorous financial sector. Our country had even then taken a leading position amongst the world’s mining economies. These realities shape the strengths of the mining industry in South Africa today, as well as the challenges we face.

To this day, mining and the related heavy industries contribute well over half of South Africa’s exports and around a tenth of the GDP. South Africa accounts for more than half of global platinum and chrome production as well as over a tenth of gold and titanium. We still have huge reserves of minerals, precious stones and coal. Still, from 1994 the industry has faced far-reaching changes in the economic environment as well as the imperative of developing more inclusive and equitable production structures.

These shifts have confronted all of us – government, business and workers – with difficult choices. The improvements in production and employment over the past year, despite persistent weaknesses in the global economy, point to our growing success in addressing them. The imperative of ensuring more broad-based benefits from mining requires equally far-reaching changes. We all now agree that in a democracy, a mining industry that uses national resources almost exclusively to enrich a tiny minority is not sustainable.

As always, broad agreement is easy, but the devil lies in the detail. It is not simple for any of the mining stakeholders to define how quickly we should move on transformation, what changes we should prioritise, and what social groups should ultimately benefit from progress toward a more equitable and inclusive industry. We want transformation to be embodied in rising employment both in mining itself and in related industries like capital goods production and beneficiation. We want increased local procurement, fair prices for local manufacturers, and a fair share of mining returns going to the fiscus.

We want to see more women workers in the mines as well as more black people in general in management and the skilled trades. And we want the communities around the mines to benefit from improved facilities and infrastructure, and to have a secure future long after the mines themselves have ended production.
The challenge is to get there without creating unnecessary uncertainty or costs for mining. We recognise that we cannot achieve all our aims overnight, but have to phase them in. But we cannot simply stop progress towards an industry that is sustainable in social and political as well as economic terms. All of us have learned a lot in the past 18 years. Government in particular has recognised that we have to be more careful to ensure that the benefits of transformation are spread more broadly and that the costs of new measures are minimised. We are also committed to ensuring affordable and reliable infrastructure as well as transparent, accountable and fair regulatory frameworks.

The shift to more efficient and predictable administration of mining rights underscores our renewed emphasis on improving governance in the mining industry. We know the system is still not perfect, but it has improved significantly in the past two years. Above all, we must ensure that in future, mineral rights go where they can best be used to develop our country, not to enrich a few or fuel speculation at the cost of current and future productive capacity and employment.

We are also committed to improving infrastructure as a key step towards maintaining the mining industry as a central export sector for our economy. The key elements here are ensuring reliable electricity as well as improving logistics, especially rail. Infrastructure has a material impact on the potential growth of the mining sector. Mineral deposits are typically located in distant and remote locations, which require dedicated investment in infrastructure that will support their cost effective and competitive development for the benefit of the country.

The Presidential Infrastructure Co-ordinating Commission has identified key programmes specifically to sustain existing mines and to open up new mining areas in the north of our country. These programmes should provide an integrated and sustainable infrastructure system to support mining long into the future while encouraging diversification and increasing local beneficiation. We are also reviewing the electricity price. Our options however, are sharply constrained by the need to finance new generation capacity and increase the space for renewable energy. Still, we will explore all avenues to moderate electricity prices as far as economically viable.

Even with our best efforts, rising electricity costs and the imperative of reducing emissions are not going to disappear. We need to work together more closely with all the stakeholders in mining in order to ensure that the industry can respond to these new realities while maintaining growth and employment as far as possible.

Electricity availability is one of the key considerations in the mining industry’s growth and development decisions. The precarious balance between supply and demand of electricity in South Africa does affect the growth possibilities in a short to medium term. Amongst the top nineteen mining countries, South Africa’s infrastructure features fairly competitively in terms of efficiency and availability, ranking fifth in terms of ports and fourteenth insofar as electricity is concerned. Nevertheless, just less than 13 per cent of South Africa’s bulk freight is currently transported by rail.

In addition, current mining practices require significant volumes of water in a water scarce country such as South Africa. Infrastructure is one of the key pillars of the competitiveness framework for mining, which has a material impact on the potential growth of the sector. Government is also committed to strengthening the support mining provides to a more developed and diversified economy. One key step to achieving this aim is to reduce the price of coal and refined metals, especially iron ore and steel, to local producers.

From a national standpoint, the enviable rents from these national resources should be used to develop the economy as a whole, not to profit a handful of mining companies. The challenge is to develop a regulatory framework that balances growing exports with sufficient local sales and processing at a reasonable rate of return to all participants. A second step is to expand local development and procurement of inputs, especially capital goods.

The Accord signed with organised business and labour around local procurement in the context of the New Growth Path provides a framework for improving efforts in this connection. Organised business has begun to investigate ways to develop South African suppliers as the basis for more integrated and dynamic economy. We are sure the major mining houses will support this effort.

We all know, however, that these challenges are only relevant because mining is so important for our country. That reality in turn reflects the huge opportunities offered by our mineral riches. There is no doubt in my mind that we can achieve our common vision for economic growth and development. And we must all understand that, given the hard legacies of inequality and joblessness, we cannot simply separate out our economic interests from social and political realities.

The need to attract investment in mineral exploration cannot be over emphasised. Various mechanisms are proposed to this effect, noting that South Africa is competing with other exploration jurisdictions for a limited global budget. These mechanisms include:

  • A competitive regulatory framework, consistent with governments’ priority deliverables;
  • Investigation of regulatory and macro-economic levers to enhance exploration;
  • Development and publishing of a mining cadastre system; and
  • Investment in state of the art research and technology for exploration.

It is important to note that government is equally concerned with the need for the amelioration of the mining working conditions, through the elimination of hazardous working environment so that workers can be safe and healthy. This point assumes particular importance in the light of the history of mining in South Africa.

Lastly, let me take this opportunity to recognise the considerable importance of the co-operation between the mining industry and Johannesburg’s two great institutions of higher learning, the University of the Witwatersrand and the University of Johannesburg, both of which, over the years, have played a valuable role in developing the skills the industry requires.

We very much hope that co-operation between the Chamber of Mines, the Trade Unions, the universities and many other institutions and agencies will continue. We want them to work together to develop a mining museum, archival collections, research and publication (not only by academics and their students, but also by those active in the industry and with an amateur interest), and dissemination of that history to the public at large, not only in South Africa, but also internationally.

>> Kgalema Motlanthe is the Deputy President of the ANC of the Republic of South Africa. This is an edited extract of his address at the opening of the Ninth International Mining History Congress

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