mining platinum resource curse

Mining for shared growth

First published at Daily Maverick here

The incoming class of ministers in the economic cluster has been met with quite a hazing. The latest GDP figures indicating a shrinking economy (against the backdrop of rising inflation and job losses), represent a cautionary note for the economic aspirations of this term of government. 

Hopes have been pinned on the beneficiation of mineral resources, that is adding value to commodities instead of shipping them off raw, as an important element of the drive to revitalise the industrial sectors of the economy. The manufacturing sector is also expected to be a source of new jobs. But these same sectors, mining and manufacturing, are the ones that have pulled down the economy in the first quarter.

In the face of the competing narratives about the platinum strike, we can agree that it has wrought devastation to those directly affected by it in the platinum belt communities, and also in the so-called labour-sending areas in the Eastern Cape.
Now the moment of reckoning has come for the rest of us. The economy is now on a path towards recession, and key economic decisions, including those by investors, will be coloured by that fact.
The challenge across the world for resource-rich countries is to find ways to avoid the ‘resource curse’, that paradoxical phenomenon that sees the well-endowed finish last. In our case, the development of one of the most lucrative mining endeavours in history created a few tycoons and a small elite paid well for performing (racially) reserved managerial and artisan jobs; but precious little broad-based development of human capital.
In mining ‘host’ communities, living conditions are no more hospitable that they were before 1994. The ‘labour-sending’ communities are still populated by those Phyllis Ntantala, writing in 1958, termed the “widows of the reserves”, women whose husbands have left for the mines, and who bear the negative social and economic consequences of that activity, with very little to show for it.
In Rehad Desai’s Miners Shot Down, we get to hear from men who shudder at the thought of sending future generations underground but who want to be able to educate their children. This aspiration offends those who subscribe to predatory forms of capitalism. In truth, successful societies are those that create inclusive institutions and economic arrangements that support the growth of a middle class. It should be obvious that even the elite stand to benefit from the upward mobility of the poor. With a combination of better wages and access to quality public goods and services, the children of poor families can go on to meet the critical skills shortage we face, or to become entrepreneurs generating wealth and employment. This not only benefits the private sector but government gains tax revenue whilst communities are strengthened by prospering citizens. Yet sons continue to replace ailing or deceased fathers to work underground in dangerous conditions for low wages.
This was meant to change. The conflict we see in the platinum belt, which traces its causes to the character of mining in this country, should not be happening if the Mining Charter meant anything. In accordance with the charter, sombre commitments were made by mining companies with regards to skills development, housing development and even beneficiation. Yet reviews and impact assessments suggest indifferent or non-existent compliance with the charter. This is not only corporate failure. Of the monies that were in fact handed over to communities, allegations of corruption and misuse abound.
A grand enterprise between government, business, labour and (to some extent) communities came to very little. This is distressing given how many of our challenges require these types of accords. When it comes to the interests of workers and their conditions of employment, or of communities receiving development funding, part of the problem is that those sitting around the table do not fully or properly represent the interests that they claim to serve.
There are many lessons to be had about developing systems of accountability, nipping the unintended consequences of policy in the bud and monitoring the effectiveness of social expenditure. For businesses that thrive on indifferent, ‘tick-box’ compliance with policy and legislation, the message is clear – it will come back to bite you.
The new minister of mineral resources, Ngoako Ramatlhodi, has vowed to resolve the troubles in the platinum belt. That is the immediate challenge. He has also indicated moves to review the policy framework in mining, including the charter. That might be tough news for mining investors who have lived with a policy regime in constant flux. But the status quo is not sustainable.

None will forgive stakeholders in the mining sector if they fail to take this opportunity to create a framework that can deliver human capital development and economic prosperity that is shared from the boardroom to the shaft. Until then, mining poses a downside risk for economic growth, communities will continue to suffer and beneficiation will remain a dream.

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