Africa’s biggest platinum industry faces one of the most bruising years in its history. Unions and management have drawn battle lines for pay talks and a cloud of question marks hangs over the mining laws – dual uncertainty that could deter foreign investors from putting money in a country that produces 70% of the world’s platinum.
In July, pay talks for a new one-year deal began. Unions for 130,000 workers in South African platinum mines, sat down with the big three: AngloPlats, Implats and Lonmin. They are likely to prove tricky and drag on for weeks. The majority union, the Association of Mineworkers and Construction Union (Amcu), wants a 15% pay rise; the second largest, the National Union of Mineworkers (NUM), wants 20% across the board. Both unions are eyeing the recovering platinum price nosing above $1,000 an ounce for the first time in years. In August 2011, it was over $1,900.
<div id="attachment_5133" style="width: 210px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-5133" class="size-medium wp-image-5133" src="/wp-content/uploads/2017/05/Peter-Leon-017-200x300.jpg" alt="" width="200" height="300" />Peter Leon</div>
Demand for platinum, thanks to jewellery and automotive manufacturers, rose 10% in the first quarter of this year, according to the World Platinum Investment Council, while supply dropped 11%. It promises profit for South African mines if they can keep costs down; wages make up almost half of costs.
Amcu has 61% of the membership at AngloPlats, 62% at Implats and 82% at Lonmin. It holds the aces and will play a mean game for a minimum wage of R12,500 (around $860) a month. This wage has been the rallying call from Amcu ever since the bitter Marikana strike of August 2012. At the announcement of its demands in July, FORBES AFRICA questioned R12,500, saying it should be more like R20,000, taking into account four years of inflation.
“If we say R20,000 for the lowest paid, the employers are going to run away so we will go for R12,500 and work up from there,” says, the president of Amcu and part-time preacher, who appeared bullish and ready for action.
“We are applying for a pay rise here, not a strike. If the employers apply for a strike we will give it to them.”
The platinum employers are likely to be a tough nut to crack; inflation, at around 6%, is on their side. They are also struggling against years of falling commodity prices and productivity. On the Johannesburg Stock Exchange, AngloPlats shares lost two thirds of their value last year and Lonmin, kept afloat by a shareholders’ bailout in 2015, lost 99%.
Aside from the industrial problems, South Africa faces many more months of uncertainty over the country’s mining laws. Amendments to the Minerals and Petroleum Resources Development Act – which governs mining – have spent four years going back and forth through Parliament; questions have been raised over the constitutionality of the amendments. Investors take a dim view of plans to make resources – like iron and coal for the steel industry – designated minerals under the law. That would mean miners accepting government prices and maybe having to ask permission to export. This could lead to a trade law complaint at the World Trade Organization (WTO). China suffered a WTO ruling against it recently in a similar case concerning rare earth.
Then there are concerns about the discretion the law hands to the minister, giving him the power to cancel mining licences and prosecute.
“It is open to discretion, with unclear rules, which makes it very difficult to invest with that level of uncertainty and that is the long and short of it,” says Peter Leon, a mining lawyer with Herbert Smith Freehills, at a briefing in Johannesburg in June.
“We are going to a third rewrite without solving the problems of the first two.”
The bill is on its way back through the legislature and a number of bodies, including the Congress of Traditional Leaders of South Africa. Leon and his colleagues say the chiefs came up with one of the best ideas yet – an independent body to allocate the state-owned mineral rights.
With Parliament adjourned for the August 3 municipal elections, mining experts fear it could be well into next year before South Africa’s mining code is fixed. Investors seek stability and regulatory certainty; with every passing month there is a risk more of them will turn away.

Platinum Blues

The Birchwood Hotel in Boksburg was an apt choice for these talks for two reasons: firstly, Boksburg is a mining town built on the digging of gold; secondly, it is a venue for boxing and home to former world heavyweight champion Gerrie Coetzee. The Friday before gold mining pay talks began in earnest, on June 16, there was a boxing tournament at Birchwood. At least the Friday fight night was fought under Queensberry rules.
The Association of Mineworkers and Construction Union (Amcu) led with its left. It may be merely the second largest union, representing 30% of the 93,000 gold miners compared to the majority National Union of Mineworkers’ 54%, but what it lacks in numbers it makes up for in chutzpah.
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“We are a serious union,” says Manzini Zungu, the spokesman for Amcu.
When the major gold producers in South Africa, the leading gold producer in Africa, made one of the best opening offers in history on July 6 – of between 7.8% and 12.96% – Amcu was the first to despise it. To rub salt in the wounds, in rejecting the offer, Amcu presented slides showing the salaries of the top mining bosses, of up to $1.7 million a year, juxtaposed with the salaries of underground miners.
“That was brilliant,” says an official from a rival union as he emerged impressed from the negotiating room.
“You can’t compare a CEO to a man who carries a shovel,” scoffed another.
Amcu put pressure on the gold employers to make a counter offer two days later. The employers stuck to their guns and Amcu deadlocked on July 8, taking a dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA), the independent arbitration body. It was enough bad news to drive the value of mining stocks down by 10% on the day on the Johannesburg Stock Exchange.
The next step is a strike and Amcu proved, in 2014, this is not too difficult. In that year, the union took the platinum mines out for an unprecedented five-month stoppage that cost more than $2 billion.
“The problem is the employers fear Amcu,” says a former member of the NUM negotiating team.
The rest of the unions, NUM, UASA and Solidarity, stayed at the negotiating table but are equally disgruntled.
How the gold employers are going to close the gap, with pay demands that go up to 80% from NUM to 100% from Amcu, is anyone’s guess.
The employers plead poverty. Figures released by the Chamber of Mines show the demands would load R16.5 billion ($1.32 billion) onto the wage bill of South African gold mines. The wage bill, in 2014, was R23.5 billion ($1.88 billion), making up 55% of gold mining costs.
“If all of the wage demands are granted, nearly all of the mines in South Africa would be under water. It could be the end of the gold mining industry,” warned Elize Strydom, the chief negotiator for the employers.
The employers also set great store by what it calls social compact – a package of pensions and welfare benefits to complement the pay. Like the opening offer, this too fell on stony ground.
“We don’t want packages, we want pay,” says David Sipunzi, the general secretary of NUM.
The employers also tried to link a pay deal to profit share if the gold price goes up. They promise there will be bonuses if profit margins, after costs have been deducted, stay above 6%. Clearly, there will be talk about retrenchments and pay cuts if profits turn to losses.
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“Will the bosses take a pay cut?” asks one of the more cynical officials at the talks.
The unions’ argument is simple. They want to use these talks to close the pay gap between the boardroom and the bottom of the damp shafts, miles underground where the gold is.
You could argue that a secretary answering a telephone in an air-conditioned office in Johannesburg earns twice as much as a miner who spits and sweats in the clammy heat, more than four kilometers underground for as little as $600 a month.
Amcu and NUM also want to close what they call the “apartheid gap” in pay – a legacy from the old days when the cheap labor of black miners made vast profits for both the mines and the state.
“We don’t fear the threat of retrenchments made by the employers, they are retrenching at Doornkop (a Harmony Gold mine) as we speak,” says Sipunzi.
Analysts have warned rising costs and falling productivity in the gold mines could cost the industry 20,000 jobs before the end of the year. The number of workers in the gold mines has fallen from 180,000, 10 years ago, to a mere 120,000, an alarming decline in a nation that has mined nearly half of all of the gold in the world.
The only jab in the eye for Amcu so far is its dismal attempt to boost its numbers represented at the talks. It claimed an extra 6,500 members, but independent auditors say 6,000 of those could not be verified. A source among the employers says of the 1,000 members claimed at AngloGold Ashanti, a mere seven turned out to be true.
What is clear is that whichever of the two main unions, Amcu and NUM, is seen to get the best deal in these talks will attract a legion of new members to their corner. Seconds out.

Gloves Off In Gold

This year Lonmin, the world’s third largest platinum producer, will try to save its African business.
After a disastrous couple of years, the future of Lonmin hung in the balance in November as the platinum mining giant needed a $407-million bailout to keep going. It was the third capital raising in six years.
Wounded by declining platinum prices, electricity shortages, slow demand, and strikes, the company’s financial circumstances deteriorated sharply. To make matters worse, the company frittered away money.
“In the boom times around 2004 and 2005, Lonmin went and bought a ground in the Northern Province around the Plat Reef, a property called Akanani. Akanani was bought for almost a billion dollars. Today, in our books, it’s worth zero. So that billion dollars went down the drain,” admits Lonmin CEO, Ben Magara.
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Magara says a further billion dollars was wasted when Lonmin embarked on a failed mechanization program. The rock was too hard and shafts too narrow.
“To try and reverse all those challenges has needed even more money,” says Magara.
On the morning of November 19, Lonmin went cap in hand to its shareholders for an emergency capital injection. Prior to the meeting, other shareholders sold out of Lonmin. The share price went down from $8 in December 2010, to just 16c in November just before the meeting.
In London, Lonmin offered shareholders a 94% discount as part of its rebuilding plan. The Public Investment Corporation (PIC) saved the day by increasing its stake in Lonmin by 23% from 7%.
Even though the bailout was successful, 6,000 job losses are expected by September. Paul Theron, the CEO of asset management company, Vestact, reckons Lonmin’s shareholders are growing tired of bailouts.
“It’s a bit like SAA (South African Airways) where they say ‘this is one last bailout please’, but unfortunately that is exactly what happened in the past. The management team has raised additional funding in order to increase equity and to pay down debt, but then proceeded to run business in a way that didn’t result in a sustainable profitable scenario,” says Theron.
“No one anticipated that we would see this level of oversupply in the industry and this level of self-demand and this level of poor prices. A lot of people assumed that once the supply side started to calm down, there would be an immediate response in terms of higher platinum prices.”
Lonmin is hoping upon hope it can save its 106-year-old African operations and more than 30,000 jobs.

Lonmin Tries A Lazarus

Ignore Elize Strydom at your peril. The chief negotiator for the Chamber of Mines may have a calm, affable and measured manner about her, but her warning to society could not be filled with more thunder and fire.
“We have five years to get things right in South Africa or we will have an Arab Spring on our hands. We have tremendous inequality that makes for a ticking time bomb in this country,” says Strydom, the labor relations expert.
She speaks to FORBES WOMAN AFRICA just days after the country’s longest-ever strike, affecting the platinum sector, finally ended (see opposite page). In the same week, the gold mines that traditionally use centralized bargaining (which Strydom leads for industry) had to turn to the labor courts to uphold an interim order preventing trade union Amcu (Association of Mineworkers and Construction Union) from calling a protected strike.
Amcu is the dominant union in the platinum sector but has only about 19% of the total members in gold. Their hardline presence is nevertheless shifting the dynamics of labor relations across the board. Strydom says Amcu represents “a whole different animal” at the negotiation table. They are the elephant in the room. As Strydom points out: “As unskilled labor goes, miners are relatively well paid, yet in the case of the strike in the platinum sector, miners were prepared to sacrifice everything and go without pay for five months. It means we are talking about issues that are much more than just about wages and money.”
It speaks volumes and Strydom puts the watershed moment for labor, government, business and society as a whole, at the Marikana massacre in August two years ago. Forty four people, mostly miners, were killed. The ripple effect from that dark week in the winter of 2012 changed the country and labor relations irrevocably. It has forced government, industry and labor to respond differently. Strydom is up for the challenge – she has to be. In her favor is her track record of breaking molds and surprising everyone by treading where she’s not expected to be. She joined the Chamber in 1999 and became the first woman to lead wage negotiations for the organization, first for the coal sector in 2001 and then for gold in 2005.
“Bless the coal sector. They trusted me in 2001, even though they were quite skeptical a woman could lead the negotiations. But by the time I was moving to gold, they were sad that they were losing me,” she says from her corner office in the Chamber of Mines Building in downtown Johannesburg.
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She comes armed with a master’s and doctorate in income law, company law and labor law, but Strydom is known to also don a hard hat and make unexpected visits to mines, choosing to descend three kilometers underground to understand conditions  mineworkers face every day.
“I’m not an ivory tower person,” she says. She has also been called a capitalist with a socialist heart. She’ll accept the label because she says it’s what makes her fully engaged with an agenda that is not just about pitting two sides together over money. The bigger agenda of socio-economic upliftment and a sustainable and transformed mining sector is what she knows is the bigger prize.
Right now that means focusing on implementing the Framework Agreement for a Sustainable Mining Industry. It’s a government-driven initiative and a document adopted a year ago. It compels organized labor, business and government to meet new targets and address the legacy issues that still cast long shadows over a sector that still props up the economy and gives employment to around 500,000 people.
It’s a framework agreement that is itself framed by multiple inherited pressures. The biggest of which for Strydom, who was at one time a university lecturer, is a failed education system that’s perpetuated a low skills base and a culture of paternalism, that’s pernicious and dominant on South Africa’s mines.
“To me, our biggest failure is that we have lost 20 years of education and now have a lost generation that has not had proper schooling,” says Strydom.
It means her work is never over, not even when she is finally able to take a week’s break in the bush.
But when the break’s over, she’ll be building relationships with new players in the negotiations arena, shoring up old allegiances. She may also be called on to work on more everyday challenges, like developing a buddy system for female miners, overseeing designs for two-piece overalls for women miners or weighing in on how many centimeters a spear can be, before it’s classified a dangerous weapon and banned from a mine.
“It is a challenge, but it’s also an opportunity. It can be exhausting and depressing but I remain fiercely loyal to the mining industry,” she says.
And Strydom isn’t known to flap or spread crises too far out from her. It’s not her style. She says: “I know the essence of me, who I am, and that’s how I can keep my balance, even in mining, which make no mistake, is a tough, tough world.”

IMG_5837

Fiercely Loyal  In A Man’s World

In a continent desperate for jobs, it is depressing to watch a once shining industry commit suicide. By May, it had cost the industry around $1.5 billion in production and a lot of credibility in the world market.
As I write, the platinum industry in South Africa has been on strike for nearly four months. More than 70,000 workers at Lonmin, Angloplats and Implats, which produce 40% of the world supply of platinum, are idle. The industry has all but closed for business thanks to an unsightly game of poker between the management and the Association of Mineworkers and Construction Union (Amcu). The last time South African mines were idle for this long was during the Rand Revolt of 1922 when striking white miners fought soldiers through the streets of Johannesburg over plans to replace them with cheaper, black miners.
Nearly a century later, Amcu, the union representing the great-grandchildren of those black miners, wants the minimum wage to be more than doubled to R12,500 – that is around $1,200 a month. It called the strike on January 23 and is not going to call it off until the magic number is reached. In many ways, the survival of Amcu – which is trying to eclipse the old school National Union of Mineworkers (NUM) – hinges upon securing this demand.
The employers say no way. Wages make up more than half of platinum mining costs and the mines say they can’t afford it; they offer 9% and no more. The word in the industry is that the employers see this as a showdown and will not budge. Other employers in gold and coal look on nervously, fearing similar wage demands from their workers should the platinum employers cave in.
Amcu risks an exodus of its new found membership if it backs down.
It is a staring competition where there is only one certainty – the platinum industry will emerge much smaller and weaker. The analysts are talking about 20,000 job losses before the end of the year, even if the dispute is settled soon, with thousands more to follow. The employers will close marginal shafts and whole operations could shut up shop.
What a pity. For years, platinum has been the blue-eyed boy of the South African mining industry. It earned high prices on the world spot market. The advantage platinum enjoys over gold is that it is actually used and consumed, rather than sitting on the shelf of a bank vault. It goes into catalytic converters in cars, helps keep the air clean and is valuable in jewelry. This means it has always enjoyed better prices than gold.
But it appears the boom times for platinum may be over. The employers have drawn a line in the sand and will try to salvage what is left of the industry when this dispute is over.
Funnily enough, the strike has not had the drastic effect on price that many feared. The spot price appears to have remained fairly stable, despite the fact that this damaging strike has taken more than a million ounces out of the market.
Some analysts even believe that this strike will help getting supply and demand back into equilibrium. Oversupply was one of the big issues last year, as the car industry slowed down, and there were stockpiles built up, hence the fairly constant price. These stockpiles are running down, as the strike wears on, and employers are already warning customers that a dearth is on the way.
Job cuts are inevitable in platinum. The industry may be able to right itself ahead of the next spike in platinum demand.
But the damage to the image of the industry is likely to be deep and long term. Foreign investors will view the labor unrest with distaste and caution. The strike is likely to make any investor think twice before putting money into South African mining. It will also damage South Africa’s reputation as a solid supplier of platinum.
The South African government appeared ineffectual in its attempt to intervene and solve the dispute. In the run up to the elections, it appeared to have forgotten about the king sized problem of a shutdown of the platinum industry all together. Now it is re-elected for another five years, surely this is a time for action.

No Winners In The Battle Of Platinum

Less than nine months after the shooting that shocked the world, conflict and tension are back at the richest mines in Africa. Thirty four miners were shot and killed, on August 16, following a week of wildcat strikes in Marikana, South Africa. Now the platinum belt is at war once again.
Miners at Lonmin downed tools for two days following the death of a union leader. The wildcat strike sent share prices tumbling a day after the company had posted positive results. Lonmin shares fell more than 10% over the two days while the rand retreated to a three-week low against the dollar, on fears that the unrest might spread across a sector that accounts for nearly half of South Africa’s foreign exchange earnings.
As an inquiry into the deaths of the 34 miners continued around 40kms away, in Rustenburg, hundreds of miners belonging to the Association of Mineworkers and Construction Union (Amcu) marched to the infamous koppie, where the massacre occurred.
In 2012, the strike was over wages; this time around it was union rivalry. Amcu accused the National Union of Mineworkers (NUM) of killing one of their office bearers. NUM denies it. Amcu, which has 70% of the membership at Lonmin, is demanding NUM leave their offices at the mine.
In the scorching heat of Marikana, it was a menacing site as miners chanted and danced their way to Wonderkop Stadium. More than 6,000 Amcu members chanted anti-NUM slogans and sang: “Who killed Steve, the man we loved so much”. This referred to the killing of 46-year-old Mawethu Steven, a shop steward who was shot dead while watching football at a tavern on May 11.
“If they have proof of us committing the killings then they must take it to the police,” says Lesiba Seshoka, spokesperson of NUM.
Following a marathon of meetings with Lonmin management, Amcu regional leaders addressed members at the packed stadium just after 4PM on a day where they vowed not to return to work until Lonmin management had kicked out NUM.
Addressing members, who were sitting on the grass using a loudspeaker system, an Amcu leader said the meeting they had attended yielded no results, as Lonmin management had declined to shut down NUM offices.
“The main issue at the meeting was our demand for the closure of NUM offices. After a meeting that started at 5AM, there’s nothing we’re bringing to you. What they [Lonmin] are saying is that they want you to go back to work,” says the leader.
Members reacted angrily and refused to go back to work at the 13 shafts that lay idle at Lonmin. Following deliberations, the leaders invited six workers from the 13 shafts, which have been affected by the strike to respond to the outcome of the meeting.
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All six workers said their co-workers would not return to work because management and government are colluding with NUM. They added that they [Lonmin and government] are allowing their members to carry dangerous weapons to the shafts.
“The employer is clearly showing that he is sleeping with NUM and government. We are not going back to work until NUM vacates the mine,” he says.
Another miner refusing to go back to work said: “What management is saying is the same as farting under water—you can’t hear it”.
Three days later, miners made a U-turn and returned underground.
Meanwhile at Anglo American Platinum (Amplats) Rustenburg, the planned retrenchment of 6,000 miners is set to get ugly. Miners are prepared to fight back and embark on a massive strike that will halt production and send shockwaves around platinum shares.
Workers committee member Evans Ramokga says the company is not backing down on retrenchments, and workers had taken it upon themselves to fight. He says after mass meetings at different shafts, workers have decided to go on strike.
“Unions have done their part and negotiated on our behalves. Now the workers have decided to lead their cause. No one is happy about the retrenchments. Workers are saying if Amplats cannot run the mines they must leave and surrender the mines to another company that will save jobs,” says Ramokga.
Meanwhile on May 21, security guards fired rubber bullets at strikers at Lanxess mine, Rustenburg—one of the biggest suppliers of chrome ore. Five people were injured. The illegal strike was over bonuses.
Days of unrest lie ahead.

The Ghosts Of Marikana

Robert Friedland was ranked 347 on last year’s FORBES’ ‘400 Richest Americans’ list with his net worth of $1.3 billion. What’s more, Friedland is looking at developing a platinum group metals (pgm) project on the northern limb of the Bushveld Complex—the geological formation, which hosts the world’s greatest known pgm resources.
This investment may be good news for South Africa but some industry watchers may wonder what Friedland has been smoking. Not only are the platinum mines the battleground for the on-going industrial relations confrontations in the mining industry but platinum market and business fundamentals have been hammered.
Further, the platinum-bearing Platreef of the northern limb is geologically very different to those of the western and eastern limbs of the Bushveld Complex, where nearly all the operating platinum mines are situated.
So far, only one mine has been successfully established on the northern limb and that’s Anglo American Platinum’s (Amplats) Mogalakwena open-cast operation. That mine is situated on the highest grade section of the Platreef, on ground that Anglo acquired back in the 1920s.
Friedland’s new company, Ivanplats, which was listed on the Toronto Stock Exchange in October through an initial public offering (IPO) was valued at around C$2.5 billion.
The IPO prospectus noted that: “Two large urban communities and additional smaller communities inhabit portions of the Platreef project… a significant relocation of communities would be required at the company’s expense to enable open-pit mining of the ATS and AMK deposits, which could be prohibitively expensive.”
The prospectus added that certain members of these communities have in the past and may in the future unlawfully and illegally disrupt prospecting or mining operations, as Amplats discovered last year. Further, on instruction from the Department of Mineral Resources (DMR), Ivanplats has agreed to stop making payments under the agreements effective November 1. Ivanplats is currently in negotiations with the community leaders to amend these agreements in accordance with recommendations made by the DMR.
There is a risk of further disruptions from the communities and, while any such disruption would likely be unlawful and entitle the company to seek legal remedies, it may cause delays, which could have a material adverse effect on Ivanplats business, financial condition, results of operations or prospects. Replying to emailed questions, an Ivanplats spokesman tells FORBES AFRICA that the company is now planning an underground mining development and the area of the deposit, that is to be mined, is largely free of development.
“The planned mine would be a highly-mechanized, underground operation accessed through shafts in open ground, designed to have minimal impact on nearby communities.
“Although the Platreef Project still is in the pre-feasibility stage, Ivanplats already has established a presence in communities in the vicinity of its Platreef project through the establishment of community liason offices.”
The Platreef project is one of two big possible developments Ivanplats is considering. The other being the Kamoa Copper Project in the Democratic Republic of Congo (DRC).
Both are at the resource delineation and upgrading stage and there’s no decision yet on which could get the go-ahead first, although the spokesman says that each is being advanced independent of the other.
Regarding the Platreef, the spokesman says Ivanplats plans to apply for a mining right, conduct additional drilling and, subject to approvals, sink an exploration shaft into the deposit this year.
Asked why Ivanplats was investing in South Africa at this point, despite the overwhelmingly negative news flow, the spokesman replied: “The company is very confident of South Africa’s future as one of the continent’s internationally recognized economic leaders… All proposed major new mine developments, by their very nature, must include assessments of longer term outlooks on investment climates and host-nation environments. Ivanplats is not pre-occupied by present views and events, as you term them, for any single nation. There are other, positive, views on opportunities for projected economic and social advances in the future.”
Friedland has made controversial decisions very successfully before, such as with his last venture, Ivanhoe Mines, which developed the huge Oyu Tolgoi Copper Project in Mongolia. That is now controlled by Rio Tinto.
The media shy man is an enigma of sorts. According to his FORBES profile, he attended Reed College in Oregon and studied Sanskrit and Buddhism in India, after graduating with a degree in political science.
This probably accounts for the strange “No comment,” he gave me when I first tried to question him on Ivanplats five years ago at the Cape Town Mining Indaba conference. He inclined his head, made the Indian “Namaste” spiritual greeting sign with his hands and said: “Forgive me but I do not want to talk about it,” before diving into his waiting limousine.
I have heard him speak on several occasions at the Diggers and Dealers Mining conferences in Western Australia as well as at the Mining Indaba.
At his best—such as addressing Diggers and Dealers in the early days of Oyu Tolgoi—he is a spellbinding speaker combining a comprehensive grasp of his subject, with the oratory of a master politician and the conviction of an evangelical preacher.
At his worst—such as the keynote presentation he gave to the Mining Indaba in 2011—he comes across as patronizing, delivering a minimum of information with a maximum of hype and arrogance.
When, on that occasion, I asked him from the floor, why he had given out so little real information his reply was: “I do it to irritate people like you”.
He can also be highly amusing, such as in 2005 when he told Diggers delegates that Ivanhoe faced the ‘Princess Leia’ and ‘Darth Vader’ options in finding a JV partner.
‘Princess Leia’ involved linking up with one of the “better-looking” copper-end users such as Mitsui. While going the ‘Darth Vader’ route meant bringing in a major mining group such as “One of those companies that use letters for their names and want to control the world’s supply”.
He did not have to name Rio Tinto (RTZ); we all got it. But it was at that same conference that another story about Friedland did the rounds, which also drew on a Star Wars analogy.
According to an industry insider, you knew the crucial moment in any negotiation with Friedland had arrived when, “He fixes you with his Jedi mind-$%@* stare”.
Irrespective of how it all works out in the end on the Platreef, this one is going to be interesting and South Africans have a ringside seat for Friedland’s latest venture.

The Spiritual Tycoon  Spies The Prize

South African mining is in tatters after weeks of spreading violence and chaos that has cost R4.5 billion ($544 million) in lost production and threatened many of the country’s erstwhile prosperous mines.
More than 1,000 soldiers have been posted to Marikana and a tight police cordon thrown around the operation.The Lonmin strike has seen one shaft mothballed and 1,200 contract workers sacked.
This is the bitter aftermath of the shootings at the Marikana operations of Lonmin, near Rustenburg north west of Johannesburg, in which 45 people were killed. In the weeks that followed, the wildcat strikes and wage demands spread. It is a sign of dangerous times that Anglo American Platinum (Angloplats) decided to suspend its Rustenburg operations, on September 12, to protect its workers from intimidation—a blow to the international image of South African mining.
“Well, it has been hurt, it has been damaged. You can’t have such a serious incident during a democracy. We have to work towards making sure that we bring back the image and the sanity of the industry,” says Susan Shabangu, South Africa’s minister of mineral resources.
Then there were more wage demands at nearby Implats, strikers stopped workers going underground at Royal Bafokeng Platinum, there was a wildcat strike by 15,000 workers at Gold Fields in Carletonville, 79 kilometers west of Johannesburg; at Marikana 28,000 thousand workers refused to go back and marched with weapons as peace talks failed and wage offers were rejected. The workers want a minimum of R12,500-a-month—triple the current wage.
The unions couldn’t call the workers back and the management appeared powerless to dismiss—often a swift way of squashing an illegal strike—for fear of even more unrest.
The biggest upshot of all this is the highly regulated labor relations procedures—which has helped keep the number of mine strikes down over the years—has been bypassed, at best, mocked at worst. In the past, under the eye of independent mediators, the Commission for Conciliation, Mediation and Arbitration, wage demands went through extensive talks and delicate mediation. Only an irrevocable breakdown would lead to a strike certificate and a legal walk out. Even then, at best there would be at most a day or two of posturing on the picket line, or even a last minute deal before a drill was downed.
“They are opening up the entire mining industry to pay demands and illegal strike action, you are not going to be able to control illegal strike action&#8230; My biggest fear is that we are not working towards a long term solution,” says the national spokesman of the National Union of Mineworkers (NUM), Lesiba Seshoka.
The first bitter legacy of Marikana is growing distrust and animosity between workers and management in an industry where the deeper underground you work, the less you get paid.
“Let’s be fair, when CEOs get millions we say nothing, when miners ask for twelve thousand Rand everybody make a noise. The manner the economy is structured doesn’t benefit everyone,” says the president of the Association of Mineworkers and Construction Union (AMCU), Joseph Mathunjwa, on August 31.
During question time in Parliament in Cape Town, on September 13, President Jacob Zuma blamed Lonmin for the unrest at Marikana saying the living conditions in the hostels left a lot to be desired and the company should have built family homes instead.
“Lonmin acknowledges that living conditions are not ideal but it is working towards better living conditions. We accept the criticism, but improving living conditions is a long process,” says Lonmin spokeswoman Sue Vey.
The second legacy of Marikana will be higher costs for mining companies, at a time when they can ill afford it, as workers appear to have proved they can ask for more wages when they want. In mining, most pay negotiations are run, in an orderly fashion, through the Chamber of Mines every two years. Gold and coal miners do this; there are proposals to bring platinum into these pay talks, but it may be too late.
Peter Major, a mining analyst with Cadiz Corporate Solutions, who has studied South African mining for more than 30 years, believes costs in platinum mining are likely to soar.
“Profit margins have fallen from 50%, a few years ago, to 10% now, quite simply the industry is running out of rope… We are getting to a point where people won’t be able to make money even at these platinum prices&#8230; It is terrifying, costs have been going up around 20% a year and these wage demands are likely to send these costs soaring even higher,” says Major.
In the angry chaos of South Africa’s mine, costs may prove the least of its problems.

The Jewel In The Dirt

Record breaking albums; sold out concerts; endorsement deals worth millions and screaming fans. This is the stuff dreams are made of, but in this day and age Africans are finding it elusive.
<div id="attachment_183" style="width: 484px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-183" class="size-large wp-image-183" src="/wp-content/uploads/2017/04/39_Asa-680x1024.jpg" alt="" width="474" height="714" />Asa at Arts Alive, Johannesburg</div>
Many young hopefuls fall for the allure of the music industry. They want to be the next Lady Gaga, 30 Seconds To Mars or Lil Wayne. Unfortunately, very few will make it and even those who do will find the cold reality that Africa’s mighty music market, South Africa, is not as lucrative as its American counterpart.
The reason? It is a small market, plagued by lagging technology and mismanagement.
The global economic downturn has hit industry sales. According to the Recording Industry of South Africa (RiSA), sales dropped by 6.9% between 2009 and 2010 and 14.7% between 2008 and 2010.
An artist who appears to have bucked this trend is newcomer, Zahara, a guitarist and vocalist from a small town near East London in South Africa’s Eastern Cape. She made news when it was reported that her debut album, Loliwe, sold more than 100,000 copies in just 19 days.
With the market where it is, the sceptics scoffed and there were whispers of cooked numbers. Zahara is managed by TS Records and distribution is handled by EMI Music.
Tyson Mqomo, a manager at EMI, refutes these allegations.
“We were also taken by surprise, but this has happened before, we did not make this up,” he says.
No matter how many Zahara sells, album sales alone will not sustain a music career or pay for lavish lifestyles, according to Clive Hardwick of Bula Music.
Hardwick has simplified the maths. If you have a compact disc (CD) that retails for $10, the retailer keeps 35% and pays the remaining 65% to the distributor. This wholesale price of $6.50 is divided up even further. Six per cent is for the manufacturing, 10-20% is kept by the distributor, and an artist could earn anywhere around 15%, depending on their contract. Five per cent pays for the producer and 6.76% is allocated for copyright. In the end the record label receives anywhere between 25% and 30%.
The average recording cost is $7, 269 and making a music video, marketing and CD sleeves pushes up expenses further.
There are currently around 1,500 record companies registered with RiSA, these include the big boys; Sony Music, Universal Music, EMI and Gallo Records. An estimated 50% of South African music releases come from these major recording companies. Across all recording mediums, 2010 sales in South Africa reached $43,770,901 for homegrown music; against $51,178,161 for international music.
The numbers don’t lie. It’s clear that there isn’t enough money going around. However, there are alternative sources of income. It just takes selling power, but unfortunately that does not come with star power.
John Langford, CEO of Big Concerts, says live performances are “the bread and butter”. FORBES AFRICA investigated how much. A certain hip-hop group asks anywhere between $3,632 and $9,685 for South African performances and $15,000 internationally. A South African male RnB singer earns $4,843 per performance and a songstress recently charged $11,637 for performing at an awards show.
To make matters worse, a good recording artist does not necessarily make a bankable performer. If you thought that local artists rake it in as supporting acts for visiting big shots, think again. The worldwide industry norm is that the locals sing for free, or even pay promoters for the privilege. This is known as “tour support” in Europe and it is the price you pay for a link with a big name.
Endorsements, sponsorships and merchandising can help boost profiles and bank accounts, only if managers are busy and sell their artists. Look at Lira, The Parlotones and HHP in South Africa.
Unimaginative management is not the only problem hampering the growth of the industry. Digitally, Africa is behind the rest of the world. Most people do not have broadband and South Africa is yet to establish an iTunes equivalent. The continent’s studios are also technically not on par with the international ones, which is one reason one why African artists fly to the States and Europe to record an album. The recording fees fly with them.
Everyone in the industry that FORBES AFRICA spoke to feels that government has failed them in ensuring effective laws to fight piracy.
From Johannesburg to Lagos you will see them at the traffic lights. Ten dollars can get you 10 CDs on the street before they even hit the shelves. Every now and again the police will round up the traffic light buccaneers and confiscate the copies—in the time it takes to memorize a Chris Brown song, the guys are back selling on the streets.
The South African Copyright Act of 1978 states that; “You may not make a copy of a sound recording without the permission of the author.” The onus is on the author to prove that such permission was never given and that is the problem for artists.
FORBES AFRICA has contacted South Africa’s Department of Trade and Industry for comment, several times, but so far has had no response.
There is so much talent among African artists, surely a celebration of home grown music would help add scarce money to the pot. Hardwick says there are boundless opportunities for African musicians to collaborate and conquer continental markets.
“Africa has a very unique sound. What Africa needs is a focal point for the African music industry,” he says.
For now, there are two lessons to be learnt. First, do not get into the music industry for the money. Second, an artist worth a buck needs a big hit and a hardworking team around them. If it were that simple everyone would be making money.

Tag: Platinum

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No Winners In The Battle Of Platinum

The Ghosts Of Marikana

The Spiritual Tycoon Spies The Prize

The Jewel In The Dirt

$43 Million And They Still Can’t Make Money!