A Bloomberg report last week highlighted how Chinese investment fund Long March Capital, was considering buying platinum mines in South Africa.
According to Bloomberg, Clement Kwong, the head of the company – which last year completed a buyout of Gold One International with partner Citic Group, thereby indirectly acquiring a stake in Sibanye Gold – was reviewing a decision to hold off on investing in SA platinum assets because of the labour issues facing the sector.
“If the industry survives and makes a profit then that would be a good signal to look at investing,” Kwong was quoted as saying, adding, that the latest round of labour unrest at Anglo American Platinum, Lonmin and Impala Platinum meant that their assets have been repriced which made them as “cheap as it gets”.
South Africa’s platinum sector is no stranger to Chinese investment, after the Jinchuan group invested $877m to help bail out Wesizwe Platinum in 2010, however, according to the National Union of Mineworkers, the entrance of a new player into the mix could place the already fragile labour relations environment in the platinum belt into an even deeper tailspin.
Eddie Majadibodu who is head of the union’s production pillar, said trade union are in favour of increased investment in SA’s industries. However, they are concerned that, if not properly managed, this could lead to lowered labour standards and reversal of benefits the mineworkers have fought for in more than 20 years of SA’s democracy.
He said government should not bow to investors’ pressures and begin to tamper with labour laws.
Joseph Maqhekeni, the president of the National Council of Trade Unions, of which Amcu is an affiliate, said the union’s stance has always been that industries need to be owned by the state on behalf of the citizens.
“If that happens then we will not have strikes because workers will acquire shares. We are not supportive of investors who want to maximise profits at the expense of workers,” according to Maqhekeni.
Maqhekeni added that the industry is well aware of “Chinese exploitations” in other industries such as the clothing and textile industry where Chinese factories in Newcastle KwaZulu-Natal were wrangled in a dispute of over wages with the Bargaining Council and the South African Clothing and Textile Allied Workers Union between 2010 and 2011.
“If you look at the situation in Newcastle, the Chinese businesses did not want to comply with the Bargaining Council’s requirements. The history of the Chinese operating in this sector is problematic and all you need to do is look at the way they handled the wage dispute in the clothing and textile industry. It is a problem,” he says.
Matt Brenzel, a portfolio manager at Cadiz Asset Management said, it was possible that there would be little or no significant impact to labour as a whole because platinum mines tended to negotiate individually with unions rather than collectively, as happens in the gold space. And, he said, it was likely that Long March Capital would be open to how it would manage operations given that it already has a 17% shareholding in Sibanye Gold through Gold One International.