Made in China, mined in South Africa

Gold and platinum serve as South Africa’s chief exports; indeed, South Africa is the world’s largest platinum producer. It would be foolish to think that the mine strikes in South Africa will have little economic repercussions on both a domestic and international scale. Over the past few weeks, South African mining corporations have been closing down amid unbearable financial losses. While one could claim that the mining industry might be cooling down, the lost production due to mine closures will continue to stimulate negative ripples throughout the state. It is doubtful that the industry’s recovery will be strong; in fact, a poorly-executed recovery may lead to further stagnation and political conflict.

Platinum flakes are commonly refined into circuit electrodes, which are used in the production of nearly every electronic device from vehicle-based computers to tablet computers.

                A recent economic poll carried out on September 17 stated that South Africa has lost around USD $563 million in revenue due to the mining industry strikes – not to mention the deaths of dozens of miners amid protest violence and police enforcement. The strikes themselves are rooted in wage demands, but they carry significant undertones of political discontent. In light of the violence and stoppage, the African National Congress has cracked down through prosecutions and arrests towards miners participating in strikes and protests. The ANC’s seemingly harsh backlash has tarnished its reputation. Political analysts suggest that while the ANC has admitted to a certain lack of economic reform during its governance, it may be too late for the ANC to put any reforms into place. Aggressive party leaders with the backing of an impoverished selectorate and unemployed citizens are proving too much to handle for Jacob Zuma’s regime. The strikes may be the catalyst that opposition leaders are looking for to add significant pressure against the ANC.

With striking workers, a mine loses nearly 6,000 metric tons of rock processing per day. With multiple mines under strike for weeks at a time, the economic production effects are ostensible.

                Prominent mining corporations, such as Lonmin and AngloGold, are familiar with worker strikes. However, the strikes at Marikana – the epicenter of this conflict – have never before been so violent. The ANC’s militant reaction has certainly distanced the governing institutions from the mining corporations, resulting in rage-fueled negotiations and general frustrations from all parties involved. While Lonmin mines have resumed business operations, recent strikes at AngloGold prove that this industry conflict is not easing.

                The ANC needs to tread very carefully in the coming months if it wants to remain democratically credible to other South African actors – namely the labor unions and mining corporations – while realizing how much this domestic conflict also effects international trade and state-based economic growth.

References:

1)      http://www.npr.org/templates/story/story.php?storyId=161252980

2)      http://www.npr.org/2012/09/22/161604472/labor-unrest-in-s-african-mines-spreads

3)      http://www.nytimes.com/2012/09/01/world/africa/south-africa-leaders-on-other-side-of-rich-poor-divide.html?ref=africa

4)      http://online.wsj.com/article/SB10000872396390443507204578019801270348398.html

5)      http://www.economist.com/node/21563759

Images courtesy of Midwest Refineries, Inc. & Business Insider