Business, Finance & Economics

Even as gold prices rise, miners struggle


BOKSBURG, South Africa — Phillip Ntandazo Madyosi, 47, has little to show for his three decades of backbreaking work in South Africa’s mines. The few skills he learned underground are of no value above the surface. Now, the small severance package he received after his recent layoff is vanishing quickly.

“That money, we use it for buying food, for transporting children to school,” he said. “We sit in the problem here. It’s not a problem. It’s a crisis. It’s a disaster.”

Even though international gold prices are high — above $900 per ounce, with some analysts predicting the price could hit $1,000 — many of South Africa's mining corporations are facing declining profits. They face higher costs in wages and safety precautions, plus many South African mines are more than 100 years old and miners must dig deeper for the gold.

Recently Anglogold Ashanti's Mponeng mine became the world's deepest at 2.3 miles below the surface. There is gold at the deeper depths, but mining firms must pay more to extract it, including increased safety measures.

South Africa’s mining industry — the main pillar of the country’s economy — was built on the cheap labor provided by generations of black workers who toiled in perilous conditions. Mining is South Africa's largest employer with 460,000 workers. More than 70 percent of those miners are black, according to government statistics. Since the end of apartheid in 1994, working conditions have improved, stronger safety regulations have been put in place, and unions have won higher wages and better benefits.

Still, every year an average of 200 miners die and an additional 5,000 sustain serious injuries, according to the unions. Unknown numbers of miners contract illnesses such as silicosis and tuberculosis, and HIV/AIDS is rampant in the hostels where many workers live. Earning an average salary of $350 a month, miners struggle to feed the eight to 11 family members who, on average, depend on them for survival. And if they lose their jobs, they are often unprepared to compete for jobs outside the mines.

For more than a century South Africa had ruled supreme as the world's largest gold producer, but no longer. South Africa's gold output fell 14 percent to 232 tons in 2008, due to power outages and labor strikes, dropping it to third place, behind China and the United States. 

South Africa's miners insist that their industry must continue to improve safety conditions and wages.

“We really are proud of our achievements,” said Lesiba Seshoka, spokesman for the National Union of Mine Workers, the country’s largest miners' union with 280,000 registered members. “But we believe that there is still a long way to go to improve the cause of mine workers.”

Seshoka said that during the 1980s and 1990s, 700 workers died every year in South Africa’s mines. Since the introduction of stringent regulations in the Mine Health and Safety Act in 1996, accidents have been systematically investigated, and fatalities have gradually decreased. Last year, 168 miners lost their lives, compared to 220 in 2007.

But the improvement was not enough for the South African government. After 3,200 miners were trapped underground for 42 hours in Oct. 2007, former President Thabo Mbeki ordered a review of the mining safety procedures. The results of the audit, released in February, showed that mining companies operating in South Africa had a rate of compliance with safety regulations of only 66 percent.

“Since 1996, the government has come up with a battery of legislative pieces and regulations to curb the fatalities and injuries that have characterized our mining industry for more than a hundred years,” said Buyelwa Sonjica, Minister of the Department of Minerals and Energy, at the report’s release. “With these efforts, it was hoped that the number of widows and orphans occasioned by the mining industry will be a thing of the past. However, this was not to be.”

Although South Africa's mining safety has drastically improved over the past 15 years, it remains below the standards of most first world countries, said Jaco Kleynhans, of the Solidarity union, which counts 25,000 miners as members. Kleynhans said that South Africa has also much more to do when it comes to supporting miners who have to stop working because of illnesses they contract on the job.

“There are certain funds where people can get money from and so on, but the bureaucracy is just terrible,” he said. “In many instances, the money is only paid out after the person has died.”

One of the biggest challenges facing mine workers is keeping their jobs. Commodity prices have plunged as global demand slowed for metals other than gold. South Africa's platinum mines, in particular, are preparing to lay off thousands of workers.

At Pamodzi Gold, a company facing liquidation, 15,000 jobs are at risk.

DRDGold Ltd., the company operating the century-old East Rand Proprietary Mines in Boksburg, east of Johannesburg, was forced to close the mine late last year after two workers died and the water level started to rise. “Retaining the underground work force indefinitely on full pay was simply unaffordable” as the mine had been operating at a loss before the suspension of operations, said James Duncan, a spokesman for the mine. About 1,400 mine workers were laid off as a result, Duncan said.

Madyosi is one of the casualties. He is now attending a two-month training session organized by the Department of Labor, along with 154 other workers. Counselors recommended he pick welding, a skill he hopes will allow him to find a job outside the mining industry.

His colleague, 32-year-old Isaac Ntjanyana Motepu, has chosen to train as an electrician, a career he had envisioned before poverty forced him to find work at the mines. Motepu is hopeful that his layoff may finally set him on the right track.

“One door closes, another door opens," he said. "That’s how it is in life."

More GlobalPost dispatches by Nicolas Brulliard:

Bush babies struggle for survival in South Africa's urban jungle

South Africa reaches for the stars


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