http://www.polity.org.za
Deepening Democracy through Access to Information
Home / Opinion / Other Opinions RSS ← Back
Construction|Gold|Africa|Business|Indaba|Innovation|Mining|Modular|Petroleum|rail|Resources|Safety|Stats SA|Technology|Training|Underground|Africa|Australia|Canada|South Africa|SA Institute Of Race Relations|Capital-intensive Mining|Labour-intensive Mining Operations|Present-day Mining Economics|Productivity-enhancing Technologies|Chris Gilchrist|Mosebenzi Zwane|Neal Froneman|Terence Corrigan|Operations|Productivity-enhancing Technologies
Construction|Gold|Africa|Business|Indaba|Innovation|Mining|Modular|Petroleum|rail|Resources|Safety|Technology|Training|Underground|Africa|||||Operations|
construction|gold|africa-company|business|indaba|innovation|mining|modular|petroleum|rail|resources|safety|stats-sa|technology|training|underground|africa|australia-country|canada|south-africa|sa-institute-of-race-relations-facility|capital-intensive-mining|labour-intensive-mining-operations|present-day-mining-economics|productivity-enhancing-technologies-industry-term|chris-gilchrist|mosebenzi-zwane|neal-froneman|terence-corrigan|operations|productivity-enhancing-technologies
Close

Email this article

separate emails by commas, maximum limit of 4 addresses

Verification Image. Please refresh the page if you cannot see this image.

Sponsored by

Close

Article Enquiry

Mining: staving off the jobs bloodbath

Verification Image. Please refresh the page if you cannot see this image.
Close

Embed Video

Mining: staving off the jobs bloodbath

24th March 2017

SAVE THIS ARTICLE      EMAIL THIS ARTICLE

Font size: -+

Gory imagery – such as ‘jobs bloodbath’ – has become common in descriptions of South Africa’s unemployment crisis, conveying not only the failure to create the employment the country needs, but also the attrition of losses. In recent discussions around the African Mining Indaba, and Stats SA’s new employment data, this term has been used to describe the trajectory of the mining industry. But is the industry bleeding? And, just as importantly, can it be infused with new vigour in future?

Stats SA’s Quarterly Labour Force Survey for the 4th quarter of 2016 (October to December) puts mining employment at 421 000, equivalent to 2.6% of the 16 069 000 jobs in the country. Notably, mining was one of only two sectors to record a decline, shedding 17 000 jobs – equivalent to the workforce of two or three mining operations - since the 3rd quarter. (The other sector to record a decline was construction, but it shed a relatively modest 9 000 jobs from a total industry workforce of 1 483 000 people.)

Advertisement

The economy as a whole added some 235 000 jobs during this period – a modest uptick, even if a significant contributor was end-of-year seasonal demand.

But job losses in mining reflect the long-run direction of employment in this sector. Official data for 1990 put employment at around 693 000 (to which could be added an indeterminate number of people working on mines in the ‘independent’ homelands). In other words, in a little over a quarter century, mining has lost at least 40% (and probably more) of its workforce.

Advertisement

If it is not a ‘bloodbath’, it is certainly a serious bloodletting.

No doubt, tough market conditions have played a role, as they have across the economy. While rising demand during the commodities boom helped mining employment recover somewhat, the downward trajectory continued. Exhausted operations have closed, and intense international competition for investment has imposed new burdens.

Governance questions also loom large. Regulatory uncertainty has been a perennial anxiety. Concerns around licensing and empowerment have ground on for over a decade. Amendments to the Mineral and Petroleum Resources Development Act have yet to be finalised – some four years after being introduced. And, even then, concern will remain that the new law could enable wide ministerial discretion, and sponsor yet more uncertainty down the line. Ill-conceived safety stoppages are now the subject of legal action. And, on top of all this, there is the barely concealed hostility towards the mining industry from many politicians, not least in the ruling party. 

Taken together, these factors have degraded South Africa’s attractiveness to investors, which accounts for a good part of the haemorrhaging of jobs, and the likelihood that the bleeding will continue.

But, more than this, the overall face of the mining industry is changing. Dr Chris Gilchrist, former mining executive and now consultant to the industry globally, argues that mechanisation and innovation is the inevitable future of the industry. This is partly a function of geology: rich, easily accessible ore deposits (so-called ‘dripping roasts’) are increasingly rare – but new technologies are bringing hitherto unviable deposits into production. He points to Australia and Canada as jurisdictions where this is the business model. ‘In Australia and Canada,’ he says, ‘it’s highly commercial and you simply have to come up with something saleable, within cost, within budget and within time-schedule.’
 
‘There are some amazing innovations coming out of Australia in particular,’ he continues, ‘For example, we’re seeing little mobile, modular gold recovery plants that can move on rail and even go underground. So, there’s no need to haul tonnes of tailings out in order to get a few grams of gold.’

The implications for South Africa are significant. Mining in South Africa remains labour-intensive (labour accounts for some 60% of producers’ costs, against 30% to 40% in more developed jurisdictions), and productivity-enhancing technologies will threaten many of those jobs.

But a converse danger exists: without innovation, the accelerated exsanguination of South Africa’s mining industry is a real possibility. At the Mining Indaba, Chamber of Mines vice president Neal Froneman argued that as ore lay at increasing depths and in circumstances that were increasingly difficult to work – some taking as much as two hours to reach – research, development and innovation were essential to the industry’s survival. He predicted that if this was not done, as many as 200 000 mining jobs would be lost by 2025. But, he said, ‘if we can extend the lives of our ore bodies by lowering the cost of operating, we can unlock low-grade ore reserves. This would extend low-grade mines by 15 years’.

The technology for this is available, or in development. And it is intrinsic to the future of the mining industry.

Nevertheless, South Africa’s mining industry and the nature of mining employment are changing. A declining demand for workers is probably inevitable. Whether this can be managed and contained, or whether it portends a calamity depends very largely on government policy and action. 

Two goals are vital: maintaining competitive labour-intensive mining operations where possible, and helping to grow and develop new-generation, capital-intensive mining.

This means ensuring the industry is seen as a partner facing real difficulties rather than as a recalcitrant opponent deserving of discipline. A stable policy framework and an understanding of the realities of present-day mining economics is a necessary first step. To this must be added a cooperative – rather than coercive – engagement over social issues, research and training.

This cannot wait indefinitely. Employment trends have not been encouraging of late. Mineral resources minister Mosebenzi Zwane told the Mining Indaba that ‘South Africa is open for business, and I invite you to partner with us as we move the industry into the next century’. These words must be matched with action, or South Africa may indeed face a ‘jobs bloodbath’.

Written by Terence Corrigan, an independent governance, research and communications consultant with an interest in business and corporate governance. He is a Policy Fellow at the SA Institute of Race Relations. Follow the IRR on Twitter @IRR_SouthAfrica.

EMAIL THIS ARTICLE      SAVE THIS ARTICLE ARTICLE ENQUIRY

To subscribe email subscriptions@creamermedia.co.za or click here
To advertise email advertising@creamermedia.co.za or click here

Comment Guidelines

About

Polity.org.za is a product of Creamer Media.
www.creamermedia.co.za

Other Creamer Media Products include:
Engineering News
Mining Weekly
Research Channel Africa

Read more

Subscriptions

We offer a variety of subscriptions to our Magazine, Website, PDF Reports and our photo library.

Subscriptions are available via the Creamer Media Store.

View store

Advertise

Advertising on Polity.org.za is an effective way to build and consolidate a company's profile among clients and prospective clients. Email advertising@creamermedia.co.za

View options
Free daily email newsletter Register Now