"Head in the sand".
This phrase springs to mind when considering the reactions of South Africa’s political leaders to the violent attacks against migrants.
And can’t say they didn’t see it coming (though if their heads were already in the sand before, then maybe they can). This storm has been brewing for some time.
Wave after wave of attacks have been made on foreigners since the 1990s. Over 100 Somalis have been maimed or killed in the Western Cape since 1997. Nigerians have continuously been made scapegoats for rising crime and a lack of economic prosperity.
Clearly a fundamental problem has been the government’s failure to put in place a clear immigration policy.
Violence adds to mining’s woes
The mining sector was hit this time. So far only two mining companies have admitted they’ve had problems. But to us the situation looks potentially explosive.
South Africa’s mines are among the biggest and most labour intensive in the world. South Africa’s Chamber of Mines reckons the gold industry alone employs 150,000 people.
For years the mines have relied on migrant labour from neighbouring Mozambique. Lesotho and Swaziland, countries both landlocked by South Africa, have been suppliers, too.
Look at the sequence of events. Violent protests began in Alexandra, a "township" just outside Johannesburg. Before long it had spread to another three settlements in Gauteng province. Pictures of men being burnt alive (scenes reminiscent of apartheid era violence) hit the international press.
In a week twenty were dead.
Then the wildfire spread to Durban in Kwa-Zulu Natal, some 600 kilometres from Johannesburg. At this point forty were dead.
Cape Town was next, followed by smaller towns across the country. Violence has now been reported in seven of the country’s nine provinces. And the death toll is 56.
Who knows when it will end? The South African police force says 30,000 people have been displaced. Aid agencies say this is a "gross misrepresentation" and in fact 100,000 is more realistic number.
Bus loads of people have been fleeing the country. Zimbabweans (there are an estimated 3 million in South Africa) have headed back home. The Mozambican government says 20,000 of its citizens have already returned.
The work force is running away
Whichever way you look at it, South Africa’s domestic economy — and indeed the mining sector — depends on migrant labour. Many semi-skilled miners are Mozambicans.
This certainly hit Centurion Gold’s Primrose mine in eastern Johannesburg. Some 85% of the miners there come from Mozambique. It had to close for days.
DRDGold, South Africa’s fourth biggest gold miner, was also affected. Two employees were killed in the violence. At its ERPM mine on the East Rand, 60% of its workforce failed to turn up. A third of them are foreigners.
For DRDGold’s Niel Pretorius, a real worry is that the violence could be used as "a mechanism to drive foreigners out of the work place."
As if South Africa’s miners don’t have enough to worry about! Electricity cuts, rising costs, inflationary pressure, safety, sky high crime, AIDS...
Adding to the cost pressure, the National Union of Mineworkers (NUM) is calling for employers to protect workers. One, junior gold miner Pamodzi Gold, which has also been hit by the violence, has responded by providing accommodation for its foreign miners and their families within the mining compound.
Production at one of Pamodzi’s shafts ground to a halt as fear caused workers to stay away. According to the company, many of its Mozambican workers have left the country though it "hopes they’ll come back".
Wishful thinking! What is there to come back to?
To date, the big boys don’t seem to have been affected. AngloGold Ashanti and Gold Fields, South Africa’s top two producers, say so far so good. Their mines are not on the East Rand, where most of the violence has occurred. In fact, most of Johannesburg’s gold mines are in the south and west.
Yet the situation remains explosive. Competition for scarce resources, which has fuelled the violence against foreigners, is not going to disappear overnight. South Africa may have seen growth of 5% in recent years, but 30% of its workforce remains unemployed. Unsurprisingly people are deeply dissatisfied. If this is not resolved quickly the violence will escalate.
If that happens, then companies like Anglo could well be affected. After all, Anglo employs 31,000 people. Around 35% of those are foreigners from countries nearby. That could translate to a 30% slump in production.
Government reaction? Too little and too late!
Frans Barker, the executive director of the South African Chamber of Mines, admits that violence must be contained quickly if South Africa wants to avert an economic crisis.
Here lies the biggest problem! The South African government’s reaction to the emerging crisis has been ludicrously slow. The country’s chief, Thabo Mbeki, took over a week to issue a statement on the issue.
Ironically, when it did finally come, he delivered it from the luxury of a Kwa-Zulu Natal hotel where he was attending a meeting with international investors. No cabinet ministers put in an appearance in any of the troubled areas.
So the new leader of the ANC, and potentially South Africa’s next president, Jacob Zuma, has been a bit more vocal. He’s been calling for military intervention.
But this is very much too little too late. The rand has slid against other major currencies. This reflects how little stomach international investors have for risk at the moment.
Now we know that where there are risks there may just be rewards. More pressure on production could indeed mean higher metal prices. But for South Africa, unless swift and decisive action is taken, that could be where it ends.
Happy mining,
Erin and Isabel
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