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Platinum success story

Oct 18 2012 09:07 Reuters

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Phokeng - While South African mining companies try to halt the spread of deadly labour strife, a kingdom that partly governs a small stretch of the country's platinum belt has managed to transform mineral wealth into social stability.

The Royal Bafokeng Nation has funnelled money it earns from its Royal Bafokeng Platinum (RBPLat) company into a mini sovereign wealth fund that provides cash for schools, clinics and infrastructure.

It and its capital, Phokeng, stand out as a beacon of success amid the poverty of the platinum belt, where sprawling tin-hut shanty towns sit alongside billion-dollar mines digging out the precious metal used in vehicle catalytic converters.

The community has not been entirely immune from the labour unrest that has rocked northwestern South Africa, home to nearly 80% of the world's known platinum reserves.

It has also been criticised for using the facade of traditional leadership to help mining firms expand in the region and wasteful spending on pet projects of the royal family.

But supporters say its basic success in providing public services could serve as a model for other parts of the country, where the ANC has failed to meet expectations of a better life since apartheid ended in 1994.

A measure of social stability has cushioned the kingdom from the wildcat strikes that have paralysed other platinum firms, hit the rand currency and raised questions about the ability of the ANC to run a sophisticated emerging economy.

More than 50 people have been killed in the platinum belt since August, including 34 strikers shot dead by police at Lonmin's Marikana mine in the deadliest security incident since the end of white minority rule.

Little of the violence has reached the Bafokeng Nation, a kingdom of 150 000 people covering 1,400 square km - a little larger than New York City.

"The ruling ANC has a slogan of 'creating a better life for all'," RBPlat chief executive Steve Phiri told Reuters. "We are trying to do the same, but we are also creating sustainability."

Salaries appear to go further

Although the nation is often called "the country's richest tribe", it is still far from a paradise.

Its unemployment rate is well above the national average and crime is high, as are HIV infection rates. RBPLat pays its workers about the same as other platinum firms.

But the wages appear to go much further because of the kingdom's social spending, residents say.

For pensioners such as Baanjo Mfulmwane, the kingdom sends out vans to shuttle them for medical treatment: "There is someone to pick me up even though I don't have money," she said.

At Lemao Boitshoko's school in Phokeng, classmates play soccer under solar-powered floodlights on a synthetic pitch imported from Italy - facilities that would be difficult to find elsewhere in the platinum belt.

"I want to be a doctor. I can do that anywhere, but it's a lot easier to do because I live here," Boitshoko said.

Public schools have, at the minimum, qualified teachers, books, desks and electricity. Boitshoko attends a regular school, but there is also a "magnet school" for the best and brightest with extra money to upgrade facilities.

The ratio of students passing a high school graduation exam in the Bafokeng kingdom is about 20 percentage points above the national average.

Most miners in the Bafokeng Nation live with their families in modest homes connected to electricity lines and clean water, and along paved roads where garbage is regularly collected.

The conditions are far better than the shanties around many South African platinum mines, where miners pay to live alone in shacks without water, electricity and plumbing, sending money to extended families far away.

Voice for the community

Surveys of residents show 80% say they feel the area is safe and 93% say schools are adequate or better than adequate. Nevertheless, Bafokeng is not without its critics.

South Africa's government recognises traditional societies like the Bafokeng but usually limits powers to ceremonial duties. Some complain about living under an unelected king.

"We want the community to have a voice and decide if they want to be subject to traditional leadership and not have it imposed on them," said Thusi Rapoo, leader of the Bafokeng Land Buyers' Association.

His group is trying to stop the kingdom from declaring large farms part of its territory, describing it as an overblown clan used as a front for mining bosses, who foisted the kingdom's leadership on the population to gain control over minerals.

Gavin Capps, research chair in Land Reform and Democracy in South Africa at the University of Cape Town's Centre for African Studies said: "Things have not gotten better at all.

"The people on the ground are absolutely adamant that they have not seen the benefits. They are extremely bitter about it and feel it is the royal family that has benefited."

Residents have complained about pork-barrel projects, pollution from mines and damage to houses caused by underground blasting.

Sue Cook, a top researcher for the kingdom said the Bafokeng leadership has made mistakes in its projects, such as in environmental protection, and is trying to remedy its miscues.

"The environmental effects of mining are one of the most serious challenges facing the Bafokeng communities. Instead of collaborating on this with the mines and the local municipality, we have tried to address it on our own. This is going to change," she said.

Well-dressed monarch

The running theme in the kingdom is to turn out fewer miners and use the platinum wealth to set its people on paths to higher paying jobs.

Royal Bafokeng Platinum is "More than Mining" read signs that identify a hydroponics vegetable farm for the blind and AIDS clinics, all built with profits from the precious metal.

The kingdom set up Royal Bafokeng Holdings in 2006 to manage and develop its commercial assets, merging two other funds. It is a major shareholder in Impala Platinum and Zurich Insurance Company South Africa, and holds shares in major telecoms firm Vodacom and local manufacturers.

The holding company's portfolio was valued at R25.1bn, according to its 2011 annual report. In 2010, it provided an R800m dividend to the Royal Bafokeng Nation, equal to about $620 per person.

Three quarters of the dividend went to schools, sewage systems, roads, electric lines, sports, police, housing and social welfare, according to the kingdom's accounts published on the Internet, providing additional benefits over and above what the local and national governments spend.

The remainder, about R200m, was spent on administration, including an undisclosed salary for the king.

At the current rate of platinum extraction, the mineral reserves in the Bafokeng land will last another 35 to 40 years, according the kingdom's estimates.

King Kgosi Leruo Molotlegi, born in 1968, trained as an architect and has a penchant for well-tailored suits. He is said to understand that the platinum wealth provides only a short timeframe to transform the kingdom.

"Our governance and internal controls must be benchmarked against the very best," he wrote in the kingdom's master plan.

"Our plans must be realistic and affordable."

 
royal bafokeng platinum  |  mining  |  platinum
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