Gold miners face a bleak future as retrenchments loom

For six years Elvis Dlamani worked as an electrician at one of the many gold mines that dot the landscape of South Africa's North West province. Eighteen months ago he was among 3,000 workers retrenched from two mines in the area owned by DRDGold.

Dlamani's R4,000 (US $666) severance payment is long gone and his attempts to find another mining job, or indeed, any job, have been unsuccessful. He sells sweets when he has money to buy them, and relies on his brother and girlfriend to help him pay the rent for his one-roomed township home.

When asked about his future, 32-year-old Dlamani shook his head, stared at the floor and said, "Just to suffer."

Following DRDGold's decision last week to finally liquidate the two mines, 6,513 workers face unemployment and a future as uncertain as Dlamani's. The outlook for the nearby town of Stilfontein and its neighbouring township of Khuma, where the mines and related businesses were the principle employers, is even bleaker.

If the closure turns out to be permanent, said Nelson Notununu, an employee at one of the mines and local secretary of the National Union of Mineworkers (NUM), "Stilfontein will become a ghost town - it will be a disaster."

Gold has played a vital role in South Africa's history and its growth into a major economic force on the continent. The city of Johannesburg was formed after vast gold deposits were discovered in the Witwatersrand area, of which North West province forms part.

More than 100 years and 41,000 tonnes of gold later, the Witwatersrand reef system is still the largest source of unmined gold in the world and South Africa remains the world's largest gold producer.

"The ore body that is here is a lot," insisted Charles Botha, a metallurgical supervisor who is among those in Stilfontein facing retrenchment after 25 years with the mines. "It is a shame that some of the shafts are out of action."

Although Stilfontein has substantial gold reserves, they have become increasingly difficult and expensive to mine.

Like most of South Africa's gold mines, the depth of operations rules out mechanisation, making the process of extracting the ore extremely labour intensive. According to DRD, labour accounts for 58 percent of its operational costs in the North West.

South Africa's high steel prices, rising water costs and rail tariffs have contributed to production costs that are unsustainable against the backdrop of the slump in the gold price, explained Lesego Mncwango, spokesman for the Chamber of Mines of South Africa.

But the current strength of the rand against the dollar has driven the final nail in the coffin for mines like those at Stilfontein, where profit margins were already slim. Nationally, the number of people employed by gold mines in the last decade has dropped from about 530,000 to just 187,000.

Days after DRD had given the required 60 days' notice of its intention to retrench the entire workforce at Stilfontein, an earthquake struck the area, killing one miner and wounding four others.

The natural disaster sped up the human disaster that began with the 2003 retrenchments. Two weeks after the earthquake, and well before the 60 days' notice expired, DRD applied for liquidation.

The fate of the mine workers and the town now lies in the hands of the liquidators, who have 45 days to decide whether the mine's liabilities really outweigh its still considerable assets.

Botha is among several mine workers IRIN spoke to who believed the liquidators will find that, with good management, the company's problems are not insurmountable.

"My heart tells me we are not going to close," he said, adding that DRD has lacked consistent leadership since it acquired the business in 1999. Botha shares NUM's view that another company should take over the mines.

Ilja Graulich, a DRD spokesman, defended his company's record, saying it had spent R300 million ($48.3 million) last year alone to try to keep the North West mines operational.

"We have spent a lot of time and effort in trying to find the right management ... we were losing R25 million to R30 million ($4 million to $4.8 million) a month," he said, adding that the workers had refused to make financial sacrifices to keep the operations afloat.

A spokesperson for the Department of Minerals and Energy told IRIN his office could only ensure that DRD provided severance packages and training to retrenched workers in need of new skills. The industry standard is one or two weeks' pay for each year of service.

For skilled white-collar workers like Botha, who live in comfortable homes with well-kept lawns in Stilfontein's pleasant residential neighbourhoods, retrenchment is a major setback; for workers like Elvis Dlamani it can mean the difference between getting by and becoming destitute.

Reint Dykema, a spokesman for the trade union, Solidarity, estimates that each mineworker supports an average of 10 dependents. The closure of the two DRD mines and the announcement last week that another gold-mining company, Harmony, intends to lay off 4,900 of its workers could leave at least 120,000 people without jobs in the next few months.

The impact of the closures will be felt beyond South Africa's borders. Gold mines have a long tradition of employing workers from neighbouring countries like Mozambique, Swaziland, Lesotho and Botswana.

More than 50 percent of the workers facing retrenchment from DRD are migrant labourers who live in single-sex hostels close to the shafts and support families in their home countries.

Moses Sephachane left his hometown of Berea in Lesotho in 1991 and has been employed as a miner at Stilfontein ever since. His $400 monthly salary feeds his wife, mother and six children back in Berea, whom he visits about once every six months.

Since operations came to a halt two weeks ago there has been little for Sephachane to do, other than sit around the room he shares with seven other men, speculating about their future.

"We're just talking and talking," he said, speaking through a translator. "I am too worried because I am just eating and not working".

Frances Mashale, a Mozambican, has a wife and three children in the capital, Maputo, who rely on his earnings. He said he left Mozambique for South Africa in 1992 because there were no jobs in his country. There are still no jobs there, Mashale said, and besides, he knows "only how to use the shovel".

In the nearby township of Khuma, idle mine workers killing time outside a bottle store express suspicions about DRD's "real reasons" for the closures, and bitterness about its lack of investment in the community since taking over the mines six years ago.

"DRD does nothing for the community - there is no relationship - they are just eating money", said Daniel Mabunda, a widower with two young daughters who has been with the company for four years. He hopes to receive some retraining so he can move to Johannesburg and try his luck as a boilermaker.

For his part, Dlamani said, he has received no support from either the government or DRD since being retrenched. His forecast for other mineworkers about to join the ranks of the unemployed is gloomy: "We are all going to become smugglers and criminals."