South African Mining Sector In Serious Trouble, Country’s Economy Downsized – Says Zambian Mining Executive
By Paolo von Schirach
February 24, 2013
LUSAKA, Zambia – As Africa is moving forward, South Africa, the Continent’s historic economic power house, seems to be falling behind, having lost its ability to modernize. The huge South African mining industry, the country’s main economic driver, is in trouble. Plenty of recent stories about violent labor unrest, in a few instances punctuated by violence and excessive use of force by the police. Many striking miners have been killed in these demonstrations that evoked the atmosphere of the worst days of apartheid.
South Africa is in trouble
Here is how a competitor sees South Africa. This is what Adam Little, an executive with First Quantum Minerals, FQM, a mining conglomerate operating in Zambia, a smaller country north of South Africa, said in an interview published in the January/February 2013 issue of Zambian Traveller:
Q. What do you say about the labour related problems facing the mining sector in South Africa?
A. We believe that the South African mining industry is in a different position to the Zambian mining industry, and we sincerely believe that there is no need for the type of tragic confrontation that we have recently seen in South Africa.
South Africa has completely missed the last two mining booms, due largely to the problems associated with labour force relations and also to the uncertainty of ownership raised by talks of nationalization.
The effect of this on the entire South African economy has been catastrophic, which has seen the country decline from a position where it contributed 40% of Africa’s total GDP to less than 20% in just 18 years. [bold added]
As a result all South Africans are now poorer than they were a decade ago. In the meantime other African countries, Zambia included, with more balanced [business-labour] relationships have enjoyed the boom times with a material rise in living standards across most of the continent.”
Bad policies, no growth
Of course, a mining company operating in a different African country may have a vested interest in exaggerating South Africa’s precarious conditions. But it is true that labor issues are a big problem, while it is also true that there has been open speculation about nationalizations concerning the South African mining and banking sectors. And it is also a fact that the South African economy is not growing much, this way making it impossible for the ANC government led by president Jacob Zuma to raise the revenue necessary to finance its very ambitious social agenda.
Bottom line: bad economic policies and troubled labor relations yield little or no new wealth. As a result, few if any new schools and hospitals built.