Mining in South Africa: The Industrialization of a Young Nation

Originally appeared on Wide Angle (PBS) website, “Road to Riches” episode, 2003

South Africa’s Gold Rush

South Africa is a land rich in mineral resources including diamonds, platinum, aluminum, coal, and gold; mining in the region dates back to the early Iron Age. The story of mining in South Africa, and especially of its gold mining industry, is closely intertwined with the story of the nation’s modern industrial development.

The news that diamonds had been discovered near Kimberly in 1867 and gold in the Witwatersrand area in 1886 immediately caught the attention of the colonial powers of Europe. Newly acquired technologies such as steamships and railroads made it both feasible and profitable to penetrate the African interior and extract its precious resources. Tensions were soon rekindled as an influx of prospectors, mostly British, began to encroach upon Dutch territories in South Africa. Disputes over mining and commercial rights and armed skirmishes culminated in the onset of The Anglo-Boer (Dutch) War in 1899. After a series of initial defeats, British forces began a steady advance into the Boer states and, under General Lord Roberts, eventually defeated the Dutch resistance. In May 1902 the Treaty of Vereeniging set the jewel of South Africa in the English Crown, but the costly war left behind bitter feelings that would reverberate through South African politics and society.

With the South African territories firmly under British control, the last obstacle to the rapid expansion of the mining industry had been cleared. The new wealth brought into the country by large mining houses such as De Beers and Johannesburg Consolidated Investments soon underpinned the South African economy and became the driving force behind its rapid industrialization. Yet while mining operations continually sought out new technologies to increase their efficiency and output, they still had a great need for African manpower. In order to maximize profits, the mining industry utilized concepts of racial privilege to create an inexpensive and malleable black work force. In addition to stagnant wages and a color bar that kept blacks in unskilled positions, South Africa’s laws required black miners to return to their impoverished rural “homelands” when they weren’t working in the mines. These patterns of migration were eventually woven into the fabric of South Africa’s landscape: By 1960, 80 percent of whites resided in urban areas while a nearly equal percentage of South Africa’s black majority lived in rural areas.

To some, the government’s acceptance of the newly formed black National Union of Mineworkers in 1982 and the miner’s strike of 1987 exposed a small seam in the rigid foundation of apartheid.

The Challenge of Transformation

Recently, the South African government has begun to seek reparations for apartheid’s impact on miners. The landmark Broad-Based Socio-Economic Empowerment Charter for the Mining Industry in 2002 stated that a 15 percent stake in all mining operations would have to be owned by historically disadvantaged peoples within five years, and 26 percent by the end of a decade. Though the Mining Charter has helped some black entrepreneurs get a foothold in the mining industry, it has also caused a measure of uncertainty in the financial sector. Critics point out that broad legislative acts such as the Mining Charter and high-profile lawsuits against companies active in South Africa during apartheid encourage businesses and investors to seek more stable markets in other countries. Uncertainty about the future of South Africa’s mining industry can have a ripple effect throughout South Africa’s economy, creating volatility in the Johannesburg Stock Exchange and even influencing the strength of the rand.

The struggles of South Africa’s mining industry are also linked to the nation’s high unemployment rate, which is currently estimated to be 40 percent of the entire population. The number of people employed in mining has been reduced by more than half since it peaked at 534,000 in 1986. Higher wages for workers have likely contributed to the mining industry’s shrinking work force. The wages of black mine workers were kept extremely low under the rules of apartheid (in 1969 some workers were paid as little as 34 cents a day), but miners have recently fought for and gained significant increases in their pay. The increased cost of labor has led many companies to adopt capital-intensive development plans in an attempt to minimize their dependence on labor.

South Africa is still the world leader in gold production, but the South African economy has gradually become less dependent on gold. However, despite the waning of South Africa’s gold mining industry and the rise of its manufacturing and service sectors, the larger mining sector remains an important component of the nation’s economy. Currently, mineral exports still account for roughly one quarter of South Africa’s export market and seven percent of its entire gross domestic product.