News / Economy

Mining Strike Impacts South African Economy

FILE - Miners gather at Wonderkop stadium outside the Lonmin mine in Rustenburg, northwest of Johannesburg, Jan. 30, 2014.
FILE - Miners gather at Wonderkop stadium outside the Lonmin mine in Rustenburg, northwest of Johannesburg, Jan. 30, 2014.
Reuters
As South Africa's biggest post-apartheid mine strike marks its eighth week on Thursday, it is already denting growth and export earnings, and many of those affected are having to sell their most prized possessions to make ends meet.

In an informal bar near the platinum belt city of Rustenburg, striking miner Oupa Majodina holds up his cell phone to show a photo of his pride and joy: his cattle.

“I own 11, but I will have to sell some of them. What can I do? I need the cash,” he said glumly as he nursed a beer.

No talks are scheduled between the two sides to the strike, the Association of Mineworkers and Construction Union (AMCU) and the world's top platinum producers, Anglo American Platinum , Impala Platinum and Lonmin, and they remain poles apart on the issue of wages.

That means the misery will only spread, making an even bigger headache for President Jacob Zuma and the ruling African National Congress on the run-in to May 7 general elections.

The strike has hit about 40 percent of global production of the precious metal, which is used for catalytic converters in vehicles and is a key source of hard currency for South Africa.

The companies have lost revenues of 9.2 billion rand ($850 million) and counting, according to an industry website that updates the losses like a Doomsday clock.

“You will need to take that 9 billion rand out of the current account because it is almost all from exports,” said Mike Schussler, who runs economics consultancy economists.co.za.

This current account deficit is already a key weakness in South Africa's economy, putting its rand currency under pressure. It grew in 2013 to 5.8 percent of gross domestic product, its widest since 2008.

A wave of violent, wildcat strikes that erupted periodically in 2012, rooted in a turf war between AMCU and the National Union of Mineworkers, cost platinum and gold producers over 16 billion rand that year, when the current account gap was 5.2 percent of GDP.

With no resolution in sight, the cost of the present strike may exceed that, and the losses will continue to mount after it is over, as operations will take a long time to get back to full production. Job losses and shaft closures look highly likely.

Terrible timing

For the current account, the losses will be magnified as South Africa's government embarks on a spending binge for big ticket items such as over 1,000 trains that will be imported from foreign companies like General Electric.

“There will be huge pressure on the current account from the government's infrastructure program. So this strike could hardly come at a worse time,” said Schussler.

The impact on growth will also be significant. Africa's largest economy is seen expanding at a sluggish pace of only around 2.5 percent per year, according to the latest Reuters poll of economists.

“Roughly speaking, if you look at our GDP, which is 3.6 trillion rand, then that 9 billion rand is about a quarter of a percent off economic growth already,” said Schussler.

Perhaps half a percent had been lost already, he added, if the 4 billion rand in lost employee wages and the effect on companies that supply and service the mines are added.

“This means growth of 2 percent or lower,” Schussler said.

Even operations not on strike, such as Aquarius Platinum's , have not been able to capitalize on their rivals' misfortunes as the strike has not had much impact on price.

Spot platinum prices are little changed since the strikes began on Jan. 23 as traders bet that the availability of above-ground stocks will cushion end-users from the impact.

Cattle and caravans

The lost wages have been felt immediately in the communities along the platinum belt northwest of Johannesburg.

Patrick Tlou, 48, the owner of the Phomolong Tavern, where Majodina and a few other men were sitting in a circle on plastic chairs drinking beer, said his trade was suffering.

“Business is very down. It's because of the strike. Many of my customers have gone home,” he said.

Home for most miners is the villages they hail from in places such as Eastern Cape province, hundreds of miles away.

This is where Majodina keeps his cattle. After sending money home for years to his family, he will now have to draw on his cows and kin to see him through the strike.

“On April 1, I will go to the local Shoprite store and get 300 rand that my mother will send me out of her pension check. But normally I send money home,” he said.

As for his cattle, it's a buyer's market as desperation sets in among miners, many of whom own livestock back in their rural homesteads.

“If I say I want 6,000 rand for this animal, someone will say I only have 4,000 rand, and I will have to take it.”

Elsewhere in Rustenburg, Ig Bronkhorst, owner of Campworld, which sells caravans and camping gear, said his business was also badly affected, though his typical client would be in a higher income bracket than the striking AMCU members, who are at the bottom of the mine wage scale.

“My business is down at least 30 percent since the strike started. It goes wider than the guys working on the mine. It is also the contractors and the suppliers for the mines, and many of them are my customers,” he said.

“People are bringing back caravans to sell because they need money,” he said.

You May Like

Philippines, Muslim Rebels Try to Salvage Peace Pact

Peace process faces major setback after botched military operation to find terrorists results in bloody gunbattle between government forces, Moro Islamic Liberation Front fighters More

Republicans Expect Long, Expensive Presidential Battle

Political strategist says eventual winner will be one who can put together strongest coalition of various conservative groups that make up Republican Party More

Video New Wheelchair Is Easier to Use, Increases Mobility

Engineers have come up with a lever-operated design that makes use of easily accessible bicycle technology More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Liberia's Almost Last Ebola Patient Grateful but Still Grievingi
X
Benno Muchler
March 26, 2015 3:41 PM
Beatrice Yardolo was to make history as Liberia’s last Ebola patient. Liberians recently started counting down 42 days, the period that has to go by without a single new infection until the World Health Organization can declare a country Ebola-free. That countdown stopped on March 20 when there was another new case of Ebola, making Yardolo’s story a reminder that Ebola is far from over. Benno Muchler reports from Monrovia.
Video

Video Liberia's Almost Last Ebola Patient Grateful but Still Grieving

Beatrice Yardolo was to make history as Liberia’s last Ebola patient. Liberians recently started counting down 42 days, the period that has to go by without a single new infection until the World Health Organization can declare a country Ebola-free. That countdown stopped on March 20 when there was another new case of Ebola, making Yardolo’s story a reminder that Ebola is far from over. Benno Muchler reports from Monrovia.
Video

Video Cambodian Land Grabs Threaten Traditional Communities

Indigenous communities in Cambodia's Ratanakiri province say the government’s economic land concession policy is taking away their land and traditional way of life, making many fear that their identity will soon be lost. Local authorities, though, have denied this is the case. VOA's Say Mony went to investigate and filed this report, narrated by Colin Lovett.
Video

Video US, South Korea Conduct Joint Military Exercises

The Eighth U.S. Army Division and the Eighth Republic of Korea Mechanized Infantry Division put on a well orchestrated show of force for the media this week during their joint military training exercises in South Korea. VOA’s Seoul correspondent Brian Padden was there and reports the soldiers were well disciplined both in conducting a complex live fire exercise and in staying on message with the press.
Video

Video Space Program Status Disappoints 'Last Man on the Moon'

One of the films that drew big crowds last week at the annual South by Southwest festival in Austin, Texas, tells the story of the last human being to stand on the moon, U.S. astronaut Eugene Cernan. It has been 42 years since Cernan returned from the moon and he laments that no one else has gone there since. VOA’s Greg Flakus reports.
Video

Video Young Filmmakers Shine Spotlight on Giving Back

A group of student filmmakers from across the United States joined President Barack Obama at the White House this month for the second annual White House Student Film Festival. Fifteen short films were officially selected from more than 1,500 entries by students aged 6 through 18. The filmmakers and their families then joined the president and a group of celebrities for a screening of their films. VOA’s Julie Taboh reports.
Video

Video VOA Exclusive: Interview with Afghan President Ashraf Ghani

Afghan President Ashraf Ghani, during his first visit as president to Washington, gave a one-on-one interview with VOA Afghan Service reporter Said Suleiman Ashna, about his request for a change in U.S. troop levels, the threat from the Islamic State, and repairing relations with the United States and Pakistan. The interview was held at Blair House, late Sunday, in Pashto.
Video

Video California Science Center Tells Story of Dead Sea Scrolls

The ancient manuscripts were uncovered in the mid-20th century, and they are still yielding clues about life and religious beliefs in ancient Israel. As VOA's Mike O'Sullivan reports, an exhibit in Los Angeles shows how modern science is bringing the history of these ancient documents to life.
Video

Video Angelina Jolie Takes Another Bold Step

Hollywood actress and filmmaker Angelina Jolie has revealed she had her ovaries and fallopian tubes removed to lower her odds of getting cancer. Doctors say the huge publicity over her decision will help raise awareness about the importance of cancer screening. VOA’s George Putic has more

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

World Currencies

EUR
USD
0.9211
JPY
USD
119.18
GBP
USD
0.6722
CAD
USD
1.2509
INR
USD
62.518

Rates may not be current.