THE JOBS of 90,000 gold and platinum mineworkers’ are at risk as Eskom (the state-owned South African electricity public utility, established in 1923 as the Electricity Supply Commission) price increases threaten.
The Minerals Council South Africa is ringing alarm bells over the threat posed to employment and production in the gold and platinum sectors as a result of recently approved electricity tariff increases, including the 13.8% hike to be implemented this April 1.
In addition, the council is warning that the hikes will accelerate the State-owned utility’s own downward spiral – as mines and smelters, which currently consume 30% of Eskom’s yearly production, respond by closing unprofitable operations.
The body’s revised estimates point to 90,000 gold and platinum jobs being at risk as a result of the increases, approved by the National Energy Regulator of South Africa (Nersa) on March 7. The figure represents a modest improvement on the 150,000 job losses forecast ahead of the regulator’s fourth multiyear price determination (MYPD4) decision.
Some 464,000 people were employed across the mining industry in 2017, and the council estimated earlier this year that about 18,300 of the 53,500 jobs shed in the industry since 2006, when South Africa’s power crisis emerged, could be directly attributed to electricity tariff increases.
Nevertheless, the outlook for the gold-mining sector is reportedly especially dire, with the council indicating that only two mines were likely to remain viable at the end of the three-year period. Previously, only one mine, with a yearly output of 20 tons, was expected to remain viable. In 2018, the industry is likely to have produced about 132 tons of gold.
Nersa has granted Eskom increases of 9.4% for 2019/20, 8.1% for 2020/2021 and 5.2% for 2021/22, following an adjudication of the MYPD4, in which Eskom requested hikes of 17.1%, 15.4% and 15.5% respectively.
The State-owned utility would increase tariffs on April 1 by 13.8%, however, given that the regulator had already approved a further 4.41% hike, in line with an earlier adjudication of three regulatory clearing account applications.
Minerals Council South Africa CEO Roger Baxter said on Monday that the ‘front-loaded’ nature of the hikes would hurt all miners as well as smelting operations.
Deep-level gold and platinum miners would be particularly hard hit, however, given that many mines were already unprofitable or marginal, as well as the fact that electricity made up about 25% and 17% respectively of a gold and platinum mine’s cash production costs.
Chief economist Henk Langenhoven said total industry production costs would rise by 29% over the three-year period, which was 12% lower than would have been the case should Nersa not have disallowed R102-billion of revenue sought by Eskom in the MYPD4.
Nevertheless, the outcome was ‘inconsequential’ for the gold sector, potentially only saving about 8,000 jobs, according to Langenhoven. For platinum, however, the impact was larger, potentially saving 22,800 jobs.
The hikes would further erode the competitiveness of the South African mining industry relative to global peers, which were enjoying lower tariffs and were also less affected by supply interruptions.
At R1.06/kWh from April 1, Eskom’s Megaflex industrial tariff was higher than the average industrial tariffs of about R1/kWh in the US and well above those of around 66c/kWh available in Quebec, Canada.
‘Our electricity prices in South Africa have gone up by 538% over the last ten years, which has obviously had a huge impact particularly on our deep-level gold and platinum mines,’ Baxter noted.
South Africa had also experienced a sustained period of rotational power cuts in mid-March, he said, with Stage 4 load-shedding, equating to cuts of 4,000 MW, declared by Eskom on several days. During those periods, mines were required to reduce their load by 20%.
Although Eskom immediately noted that R102-billion in revenue had been disallowed by Nersa for the MYPD4 period, Langenhoven cautioned that the approved hikes were likely to suppress demand further and accentuate Eskom’s so-called ‘death spiral’.
He said that, while Eskom expected mining-related revenue to rise to R50 billion by the end of the MYDP4 period, the modelling done by the Minerals Council South Africa showed that its revenue could fall to about R30 billion as a result of operational closures.
‘If the mining industry’s usage declines as tariffs make certain operations and activities unprofitable, Eskom will not achieve its targeted sales volumes,’ Langenhoven explained.
‘Inevitably, the increases awarded to Eskom will only serve to accelerate the power utility’s downward spiral that will come as a result of inflated tariff increases and the declining electricity usage by a critical consumer.’
Baxter indicated that the industry had noted the offer of special pricing agreements for companies experiencing distress as a result of the hikes, but was unaware whether any platinum or gold miners had applied to Eskom and Nersa for relief.
- The South African Federation of Trade Unions (Saftu) warned this week that the arrest of the South Africa Police Union (Sapu) president Mpho Kwinika had ‘coincided with calls by union members for the presidency to probe police corruption’.
Sapu is, in fact, itself affiliated to Saftu. And speaking to Radio 702, Saftu general secretary Zwelinzima Vavi stressed after it had happened that it was ‘no coincidence’ Kwinika was arrested, and allegedly assaulted, by police – at Sunnyside, Pretoria – at the weekend.
In fact the SAPU police union boss was ‘assaulted’, Vavi insisted – ‘but cops say he was resisting arrest’.
And, in fact, the President of the South African Policing Union Mpho Kwinika was ‘assaulted’ by police officers and ‘sustained a broken arm, burst ear …’
It was in the course of that assault, according to the union, that Kwinika sustained ‘a broken arm, burst ear drum and bruising to his ribs. Police, however, said he was ‘disturbing the peace’ and had ‘resisted arrest.
‘The news of the brutal assault has shocked everybody in the federation … It should shake everybody from the whole world who believes in democracy,’ Vavi went on to explain.
‘He slept in his own urine the whole night, not allowed to go to the toilet.’
‘Kwinika’s treatment was akin to that in the apartheid era,’ Vavi added. And at the same time ‘Kwinika had known that he was in danger for weeks.
‘He has been followed for weeks before that meeting (with national police commissioner, Khehla Sitole) by unmarked cars.
‘His number plates were ripped off and he received calls, some of them threatening, from strangers. So he was expecting that something … is going to happen to him,’ Vavi went on to say.
‘The same calls and following is now being directed to the general secretary of the union, Tumelo Mogodiseng,’ Vavi added. And in response, the police union has ‘called … for General Khehla Sitole’s head’.
Or more specifically, the South African Policing Union (SAPU) has called ‘for the national police commissioner General Khehla Sitole to be axed …’
Kwinika was charged with disturbing the peace, assaulting police officers and resisting arrest. Vavi claimed the charges were ‘trumped up’.
Now Kwinika is due to appear in the Pretoria magistrate’s court on Wednesday. And Saftu said it had since written to President Cyril Ramaphosa and the SA Human Rights Commission seeking assistance.
But while national police spokesperson brigadier Vish Naidoo has confirmed the arrest – he was adamant that police operated ‘within the confines of the law’ and using ‘minimum force’ to effect an arrest.
Responding to Saftu’s allegations on Monday night, he continued: ‘Our police acted within the confines of the law. If anyone feels otherwise, they are welcome to open a case.
‘When such a case is opened, we will bring it to the attention of the Ipid (the Independent Police Investigative Directorate) for investigation.
‘When a police officer is effecting an arrest and there is resistance, they are within their rights to use minimum force to restrain a suspect.’
- Meanwhile, the National Union of Metalworkers of South Africa (Numsa) has said on Monday that it would continue to defend workers at BMW South Africa, and do everything in its power to defend their right to strike.
This comes after the Labour Court granted BMW South Africa management an interdict to block Numsa members from continuing with their strike at the company’s Rosslyn plant in Pretoria.
At least 2,500 workers at BMW had downed tools and embarked on a strike earlier on Monday over the changing of terms of service. But the court interdict means that workers will now have to return to work.
Numsa said in its statement that the car manufacturing company was trying to impose a shift rotation system on workers without paying the shift allowance which had been previously been allocated to workers.
The union said BMW South Africa previously had fixed term contract workers who were on permanent night shift, and that they had earned a 28 per cent night shift allowance. But under the new system, Numsa said, the company was only willing to pay them the 23 per cent night shift allowance.
Jerry Morulane, Numsa regional secretary in Hlanganani, said their members had gone on strike because BMW South Africa ‘unilaterally changed the terms of service’.
Morulane said the car company is trying to impose a shift rotation system on workers, but they do not want to pay the shift allowance, which had been previously allocated to workers all along.
‘We will be pursuing other avenues to ensure that our members will be able to legally embark on this strike again soon,’ he said. ‘We urge BMW management to engage us meaningfully so we can resolve this amicably,’ Morulane added.
BMW was not immediately available for comment on Monday.