The Politics of Platinum


Platinum is among the world’s rarest and most valuable metals, prized for its strength and its contribution to cleaner air, cancer care and electronics. Almost three-quarters of world production comes from a single place — South Africa — leaving the metal and the country’s politics inextricably linked. For many platinum miners, things haven’t changed much in the 21 years since apartheid ended, offering a familiar contradiction between the luster of the metal, along with its precious cousins, gold and diamonds, and the fortunes of the people who dig it out of the ground.

The Situation

Squeezed by a price slump and higher costs that have left most mines unprofitable, platinum producers are trying to shut sites and cut jobs. The metal’s price has tumbled 45 percent from its post-financial-crisis high of $1,915.75 an ounce in 2011 to reach a six-year low by the middle of 2015. South Africa’s biggest producers face pressure to keep mines open to keep thousands of workers employed in a country where one in every four people is out of work. Platinum mining is concentrated in a ring of cliffs in the northeast part of the country where miners dig for the metal in a labor-intensive process using hand-held drills. Miners walked off the job in January 2014 in an industrywide strike that paralyzed production of the country’s top export. The standoff over pay and benefits dragged on for five months and became the longest and most-costly mining strike in South African history. It involved more than 70,000 workers, claimed at least four lives and left thousands dependent on food handouts as miners went without pay. The biggest union was demanding wages that were more than double what some workers received and was forced to compromise.  With the industry accounting for about 5 percent of gross domestic product and employing about 198,000 people, the deadlock caused South Africa’s economy to contract in the first quarter of 2014. The three biggest platinum producers say the strike cost them about $2 billion in sales, though their stockpiles of the metal kept the market supplied.

Source: Bloomberg

The Background

Black mine workers joined Nelson Mandela’s political struggle against white rule in the 1980s with the establishment of the first large union. Frustration mounted as a tiny elite with ties to his ruling African National Congress party benefited from more than $61 billion in black economic empowerment deals that created at least one black billionaire. In the shantytowns of corrugated metal shacks where many of the country’s platinum miners live, discontent with the pace of pay increases has escalated, and at times turned violent. In 2012, police shot and killed 34 protesters at a Lonmin mine after workers took up sticks and machetes, triggering the most lethal police action since the end of apartheid. The bloodshed fueled the rise of the Association of Mineworkers and Construction Union, which now represents most workers.  The union is seen by workers as less beholden to the ruling party than the more than 30-year-old National Union of Mineworkers it replaced. Killings of members of both unions followed as they vied for control. The new union has also threatened to strike at gold mines, where its members make up at least 30 percent of the workforce. South Africa is the world’s sixth-biggest producer of the metal, falling from the top slot in 2007.

Source: Chamber of Mines of South Africa

The Argument

The union says the platinum industry should stop relying on cheap labor and that it will keep fighting for what it calls a living wage — an entry-level monthly salary of 12,500 rand ($1,200) before benefits. Platinum companies say that’s unrealistic. The cost of producing the metal has surged in the last five years, fueled by wage increases exceeding inflation and a jump in electricity prices. The amount of platinum each worker produces is also falling as lower-grade deposits are tapped.  Demand from jewelry makers has stagnated and sales to the biggest customers, the makers of catalytic converters that reduce harmful emissions from cars, have been crimped by more recycling.

The Reference Shelf


    First published Jan. 20, 2014

    To contact the writer of this QuickTake:
    Paul Burkhardt in Johannesburg at

    To contact the editor responsible for this QuickTake:
    Leah Harrison at

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