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

Photogallery Americans Celebrate Thanksgiving With Feasts, Festivities

Holiday traditions include turkey dinners, 'turkey trots,' American-style football and New York parade with giant balloons More

Video For Obama, Ferguson Violence is a Personal Issue

With two years left in term, analysts say, president has less to lose by taking conversation on race further More

Video Italian Espresso Expands Into Space

When Italian astronaut Samantha Cristoforetti headed for the ISS, her countrymen worried how she would survive six months drinking only instant coffee More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
South Africa Sees Male Circumcision as Way to Reduce HIV Infectionsi
X
November 28, 2014 3:31 PM
South Africa remains plagued by AIDS despite massive government and NGO efforts on prevention and life-sustaining Anti-Retro-Viral programs. But the country has opened up another front to reduce new HIV infections: promoting circumcision. Emilie Iob reports for VOA News from a pioneering circumcision center in Orange Farm, Johannesburg.
Video

Video South Africa Sees Male Circumcision as Way to Reduce HIV Infections

South Africa remains plagued by AIDS despite massive government and NGO efforts on prevention and life-sustaining Anti-Retro-Viral programs. But the country has opened up another front to reduce new HIV infections: promoting circumcision. Emilie Iob reports for VOA News from a pioneering circumcision center in Orange Farm, Johannesburg.
Video

Video To Make A Living, Nairobi Street Vendors Face Legal Hurdles, Physical Violence

The Nairobi City Council has been accused of brutality in dealing with hawkers in the Central Business District - in order to stop them from illegally selling their wares on the streets. Lenny Ruvaga has more for VOA News from the Kenyan capital.
Video

Video For Obama, Ferguson Violence is a Personal Issue

Throughout the crisis in Ferguson, Missouri, President Barack Obama has urged calm, restraint and respect for the rule of law. But the events in Ferguson have prompted him to call — more openly than he has before — for profound changes to end the racism and distrust that he believes still exists between whites and blacks in the United States. VOA White House correspondent Luis Ramirez reports.
Video

Video Online Magazine Gets Kids Discussing Big Questions

Teen culture in America is often criticized for being superficial. But an online magazine has been encouraging some teenagers to explore deeper issues, and rewarding their efforts. VOA religion reporter Jerome Socolovsky went to this year’s Kidspirit awards ceremony in New York.
Video

Video US Community Kicks Off Thanksgiving With Parade

Thursday is Thanksgiving in the United States, a holiday whose roots go back to the country's earliest days as a British colony. One way Americans celebrate the occasion is with parades. Anush Avetisyan takes us to one such event on the day before Thanksgiving near Washington, where a community's diversity is on display. Joy Wagner narrates
Video

Video Aung San Suu Kyi: Myanmar Opposition to Keep Pushing for Constitutional Change

Myanmar opposition leader Aung San Suu Kyi says she and her supporters will continue pushing to amend a constitutional clause that bars her from running for president next year. VOA's Than Lwin Htun reports from the capital Naypyitaw in this report narrated by Colin Lovett.
Video

Video Mali Attempts to Shut Down Ebola Transmission Chain

Senegal and Nigeria were able to stop small Ebola outbreaks by closely monitoring those who had contact with the sick person and quickly isolating anyone with symptoms. Mali is now scrambling to do the same. VOA’s Anne Look reports from Mali on what the country is doing to shut down the chain of transmission.
Video

Video Ukraine Marks Anniversary of Deadly 1930s Famine

During a commemoration for millions who died of starvation in Ukraine in the early 1930s, President Petro Poroshenko lashed out at Soviet-era totalitarianism for causing the deaths and accused today’s Russian-backed rebels in the east of using similar tactics. VOA’s Daniel Shearf reports from Kyiv.
Video

Video Hong Kong Protests at a Crossroads

New public opinion polls in Hong Kong indicate declining support for pro-democracy demonstrations after weeks of street protests. VOA’s Bill Ide in Guangzhou and Pros Laput in Hong Kong spoke with protesters and observers about whether demonstrators have been too aggressive in pushing for change.
Video

Video US Immigration Relief Imminent for Mixed-Status Families

Tens of thousands of undocumented immigrants in the Washington, D.C., area may benefit from a controversial presidential order announced this week. It's not a path to citizenship, as some activists hoped. But it will allow more immigrants who arrived as children or who have citizen children, to avoid deportation and work legally. VOA's Victoria Macchi talks with one young man who benefited from an earlier presidential order, and whose parents may now benefit after years of living in fear.
Video

Video New Skateboard Defies Gravity

A futuristic dream only a couple of decades ago, the hoverboard – a skateboard that floats above the ground - has finally been made possible. While still not ready for mass production, it promises to become a cool mode of transport... at least over some surfaces. VOA’s George Putic reports.
Video

Video Falling Gas Prices Impact US Oil Extraction

With the price of oil now less than $80 a barrel, motorists throughout the United States are benefiting from gas prices below $3 a gallon. But as VOA’s Kane Farabaugh reports, the decreasing price of petroleum has a downside for the hydraulic fracturing industry in the United States.

All About America

AppleAndroid

World Currencies

EUR
USD
0.8010
JPY
USD
118.31
GBP
USD
0.6371
CAD
USD
1.1397
INR
USD
62.122

Rates may not be current.