Friday, 21 September 2012

The 'upside' for SA mines

Some time has passed since that fateful Thursday afternoon at Lonmin's Marikana mine. Without abrogating from the human-tragedy, you have to ask whether Father Time has finally caught up with SA mining companies? I think it has. Here's why.

Productivity in the mining industry is a measurement of sale-able tonnes per man year (tpmy). ie: the number of tonnes mined / sold averaged across the labour-force.

For illustration - a coal-mining comparison between South Africa, USA and Australia. Sale-able tpmy for the three countries aggregated across underground and surface-mining for each country is as follows:

USA - 9000 tpmy*
Australia - 7000 tpmy*
South Africa - 3000 tpmy*

*Although the data is fairly dated, the ratio holds true. South Africa's productivity figure is less than 50% of Australia's figure and or 33% of the USA figure.. Some small anomalies aside, the discrepancies in productivity, particularly in South Africa's case, is directly related to technology and work-practice. The SA mining industry's objective of job creation and or maintaining employment at the highest levels (whilst remaining profitable), although commendable and encouraged at State-level, is under the current circumstances, unsustainable.

The associated physical and psychological trauma from mine violence and intimidation respectively must, sooner rather than later, reverse the current labour-intensive work-practices in favour of technology. The ensuing elimination of jobs by SA's largest employer will be, undoubtedly, the single worst economic tragedy this country will face, this century, thus far.

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