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Govt blames dividends for mining jobs crisis

Cape Town - Multinational mining companies tending to focus on declaring dividends to shareholders rather than retaining employees is one example of the generic causes of job losses in the South African mining industry, according the Department of Mineral Resources (DMR).

This is according to a report on what the DMR calls a crisis of job losses in the mining industry. The DMR submitted the report to the Parliamentary Portfolio Committee on Mineral Resources on Wednesday.

The report also blames mining job losses on "bloated structures" at mining companies' head offices rather than a focus on having operational mines.

A number of mining companies are listed in the report as having declared dividends and having "demonstrated bloated structures" at head offices, yet having announced retrenchments. According to the report, these companies include Optimum Coal, Exxaro Coal, Evandor Coal, Samancor, Rustenburg Platinum Metals, Sibanye Gold, AngloGold Ashanti, Minteals and Maseve Platinum.

According to the DMR report, there are examples of mining companies spending the skills levy on training senior executives rather than using it for specialist training for workers.

The report also lists suppressed demand and supply and price dynamics in the mining industry as generic causes of job losses.

Greater black participation

The report concludes that the DMR wants to facilitate greater participation by blacks and new entrants to the mining industry by means of the Mining Charter and other interventions such as the junior miners strategy.

The DMR wants to ensure that what it calls "vibrant, functional future forums" are in place between mining companies and unions to mitigate job losses. Yet, according to the DMR, not all future forums are functional, "because companies are worried to disclose financials to employees even when in some instances employees are shareholders..."

According to the report, the DMR wants to ensure that mining companies adhere to the requirements of section 52 of the Minerals and Petroleum Resources Development Act (MPRDA) on how retrenchments should be managed. The aim is, among others, to explore alternatives to retrenchment in an attempt to save jobs and where this is not possible, to assist retrenched workers to access support mechanisms.

The report also concludes that the board must ensure that companies adhere to a stakeholder declaration signed in 2015. It contained a number of interventions and a task team was established.

The report lastly proposes that the Minerals and Petroleum Board utilises technical expertise from state-owned enterprises (SOEs) to assess the technical reasons for retrenchments. In 2016 the board assumed responsibility for overseeing the implementation of the declaration in order to manage retrenchments.

Declining trend

According to the report the declining trend in mining employment dates back to 1986 when employment peaked at 829 000 direct jobs. By 2004 mining employment hit a low of about 400 000 jobs. Most jobs were lost in the gold sector. After the promulgation of the MPRDA in 2004, mining employment increased to 530 000 in 2012.

DA MPs in the portfolio committee did not take kindly to the report. Hendrik Schmidt regards the DMR report as "one sided" as it does not include the role government played in creating the circumstances leading to mining job losses. He referred to a report by the Minerals and Petroleum Board which found it is very important to clamp down on illegal mining.

Apart from illegal mining, trade union rivalry is a big concern impacting negatively on productivity at mines, according to Schmidt. Other factors include a lack of modernisation and coordination between the government and the private sector, as well as corruption, he said.

"We need an untarnished minister, who has the support of unions, industry and government and not just the support of some unions," said Schmidt. "Government has as much a role to play as industry."

In the view of DA's James Lorimer the report is avoiding important issues, like about 23 000 mining jobs having been lost since the new Mining Charter was announced in June.

Western Australia

"In Western Australia the mining industry is growing, while we are losing jobs in the mining industry. Mining companies must make money. If you invest your pension with them, you would want them to pay you a dividend," Lorimer told the DMR in the committee meeting.

"If companies cannot pay dividends they will not invest here. In Western Australia they can make money, while in SA companies get bashed by government if they try to make money. Government policy is the problem. Companies want regulatory certainty."

ANC MP Mapule Mafolo did not agree with the DA stance.

"We support the minister. We as the ANC know the work of opposition parties is just to protect white monopoly capital," she said.

For ANC MP Imamile Pikinini it is important to ensure an equal footing going forward. He sees the forums as a process in the right direction.

"We have to go forward together. I am happy with the report," he said.

'To lose a job is to die alive'

The DMR emphasised during the portfolio committee meeting that creating jobs is very important for government.

"Minerals belong to the people and companies coming (to operate here) must create jobs. We tell companies that, where they cannot deliver on their promises, they must discuss it with the DMR. The minister has been good at meeting with companies and workers to find solutions together," a DMR representative told the committee.

She also acknowledged the threat posed by illegal mining and the importance of finding solutions to this problem together.

The DMR's response to the DA's issue of the importance of being able to declare dividends, was that the DMR has seen no value accruing to previously disadvantaged groups and BEE partners. It wants to see this being more balanced.

"Often you will see mines have duplication of duties like a black CEO with a white chief operating officer (COO) who runs the CEO as there is no trust that the black CEO can run the company," a DMR delegate told the committee.

The chair of the committee, Sahlulele Luzipho of the ANC, concluded the briefing by saying that in order to be fair, the committee would also have to hear from the Chamber of Mines and the unions regarding the issues on job losses.

"To lose a job is to die alive. You lose your dignity. The reality is that people are losing their jobs, while we are trying to outscore each other. We must look at all avenues. Therefore, retrenchment must only happen if there is no other way and we can only deal with that if we interact with all stakeholders," said Luzipho.

"We have to be sensitive. SA has to move forward and Parliament has to facilitate the process."

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