Guardian/Johannesburg
One of Carletonville’s few claims to fame is the world’s deepest gold mine, diving more than 3,777m below the planet’s surface. Over 70 years its townships grew up around one industry - mining - in the South African province of Gauteng, meaning “Place of Gold”.
But Carletonville, west of Johannesburg, cannot bank even on gold to weather the global recession. “We are being affected big time,” said Nomvula Masina, 43, supervisor at the Ekhaya miners’ hostel.
“People are losing their jobs, which usually means they have to vacate their house and end up in a squatter camp. That affects their children, who can’t go to school, and their domestic workers also lose their jobs.”
Mining is one of the main pillars of the South African economy, but now it is taking a battering. Nowhere is this more evident than at Anglo American, one of the world’s biggest diamond and platinum producers, which has been hit hard by the worldwide collapse in the price of precious metals.
Anglo yesterday (31JUL) announced a 69% decline in profits to $1bn in the first six months of this year. Profits from subsidiaries such as Anglo Platinum and De Beers, the diamond producer, almost disappeared.
Cynthia Carroll, the group’s American chief executive, said that the company was on-track to deliver $2bn of savings by 2011 and had already cut costs by $450m this year. Most controversially, this includes slashing 15,405 jobs out of a target headcount reduction of 19,000 by the end of this year.
Carroll is hoping that her tough action will reassure sceptical investors that she can cut it in the male-dominated world of mining. She is also trying to fight off a “merger of equals” offer from acquisitive rival Xstrata.
Led by the renowned deal-maker Mick Davis, Swiss-based Xstrata proposed a deal at the end of June which it claims could save $1.6bn in synergies. But Anglo rejected it outright, arguing that its own assets were of a better quality and it did not want to “share” its cost-cutting benefits with shareholders of another company.
The impact of Anglo’s cuts on the South African economy, suffering its worst recession for 17 years, is dramatic. Trade unions say that a fifth of all South Africa’s recession-linked job losses are at Anglo Platinum. They estimate that a typical miner has between seven and 10 dependents, so mass unemployment takes a devastating toll on communities.
Anglo Platinum has been hit by the global dive in car sales because platinum is used in catalytic converters. But unions feel that this should not be an excuse to put people out of work.
Reint Dykema, a spokesman for trade union Solidarity, said: “Anglo Platinum is carrying out by far the biggest retrenchment in South Africa - the next biggest was 6,000. If you look at the other platinum companies, there was no retrenchment.
“Anglo Platinum treats workers like a commodity, not as workers. It’s too easy for it to retrench them. Why isn’t there a Plan B? The management are sitting on their pedestal in London and don’t know what’s going on on the ground.”
Anglo, now headquartered in London, is also seeking to shed some of its assets. Sir John Parker, its new British-born chairman, will order the sale of the British construction firm Tarmac, the Observer reported this week. The group is aiming to sell a 50% stake in its Brazilian iron ore operation, Minas Rio, which could raise $2bn.
But it was the disposal of its final 11.3% shareholding in AngloGold Ashanti, for $1.28bn, in March this year that could fuel concerns that the company is losing touch with its South African roots. AngloGold Ashanti employs miners in Carletonville, but jobs there are now painfully thin on the ground. Men living in hostels gather in the cold early each morning in the hope of finding work.
Mine lift operator Felix Mbingeleli, 36, has seen his living standards plummet since becoming unemployed last year. “Imagine going from Sandton [Africa’s wealthiest area] to a wooden shack,” he said. “That’s the kind of life I’m undergoing. My wife and four-year-old daughter are in one room with an outside toilet.”
Sipho Madla, 39, married with three children, now regrets quitting his job as a machine operator for AngloGold Ashanti, working six or seven days a week and earning R10,000 ($1,275) a month. “I tried to start a transport business but it didn’t work out. I wish I was back at AngloGold.”
Anglo American was founded in South Africa in 1917 by Sir Ernest Oppenheimer with capital raised from British and American financiers such as J P Morgan, to exploit the east Witwatersrand goldfield. In 1999 it moved its head office to London and listed the stock on the London exchange. It now operates in 45 countries but 40% of the group’s profits and assets remain in South Africa.
Carroll has overseen a swingeing cost-cutting programme to balance the books. In May, Anji Hunter, formerly Tony Blair’s “gatekeeper” at 10 Downing Street, was recruited as group head of government and social affairs. But it was the appointment of Parker, who is also chairman of National Grid, that dismayed unions who wanted a black South African in the role. The post-apartheid government’s Black Economic Empowerment programme has made faltering progress in the sector.
Patrick Craven, a spokesman for the Congress of South African Trade Unions, the country’s biggest union, said: “In line with current government policy, we would prefer to have a black South African as the chairperson of Anglo. We believe this would be a positive signal that, Anglo is committed to South Africa, to the transformation of our economy and the development our country.”
Anglo said it had considered a number of black candidates but they had other commitments. Cyril Ramaphosa, who built the powerful National Union of Mineworkers (NUM) under apartheid, was at the top of the South Africa government’s list of candidates.
Shane Chonshane, a spokesman for the NUM, said: “If Cyril Ramaphosa was not available, they should have looked elsewhere. It’s not really about race, it’s about equity to appointments for people who were previously disadvantaged.”
Dykema, of the Solidarity union, is also critical of Parker’s selection.
“Black or white, it doesn’t matter to us if he has some mining background and insight into the unique South African circumstances, especially dealing with labour in these tough times. They would have done better appointing someone from South Africa.”
During the apartheid era the South African government systematically excluded African, Indian and “coloured” (mixed race) people from meaningful participation in the economy.
The release of Nelson Mandela and, in 1994, the first democratic election were big strides in the fight against racism, but class was something else.
The most high-profile legislation aimed at challenging structural inequality is the Black Economic Empowerment programme (Bee).
Companies’ progress is measured in direct empowerment through ownership and control of enterprises and assets; management at senior level; human resource development and employment equity; and indirect empowerment through preferential procurement, enterprise development and corporate social investment.
But Bee has been strongly criticised for enriching a minority of “black diamonds” loyal to the governing African National Congress and driving away white businessmen. Businessman Moeletsi Mbeki, brother of the former president Thabo, has said the policy discourages black entrepreneurship and education.
Whites, who make up 10% of the population, remain disproportionately represented on boards.
Millions of blacks still live in shacks or basic housing, many without access to electricity, running water or sanitation. Frustrations boiled over this month, with violent protests in townships, right, over poor service delivery.
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