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E-ISSN 2039-2117
ISSN 2039-9340
Mediterranean Journal of Social Sciences
MCSER Publishing, Rome-Italy
Vol 5 No 2
January 2014
63
Thematic Lessons from the Marikana Miners’ Strike in South Africa:
A Corporate Governance Perspective
Linda Muswaka
Lecturer, Faculty of Law, North West University – South Africa
E-mail: leemuswaka@gmail.com
Doi:10.5901/mjss.2014.v5n2p63
Abstract
The Marikana’s miners’ strike began on 10 August with the demand by approximately three thousand rock drillers to have
salaries increased from R4 000,00 per month to R12 500,00 per month. These workers walked off the job after Lonmin
management failed to meet with workers. A series of violence then followed leading to the massacre that occurred on 16
August when at least thirty six miners were killed and seventy eight wounded by members of the South African Police Service
(SAPS). Following this incident, the President of the Republic of South Africa, Mr. Jacob Zuma appointed, in terms of section
84(2)(f) of the Constitution of the Republic of South Africa, 1996 a Commission of Inquiry chaired by retired Judge of the
Supreme Court of Appeal, Ian Gordon Farlam. The Commission’s mandate arising from the Terms of Reference promulgated
on 12 September 2012 is to investigate matters of public, national and international concern arising out of the tragic incidents
at the Lonmin Platinum mine in Marikana. This article examines the Marikana miners’ strike through corporate governance
lens. The aim is to extract thematic lessons from a corporate governance perspective.
Keywords: Corporate Governance, Shareholders, Stakeholders, Marikana, Mine workers, Mining Communities
1. Introduction
The Marikana miners’ strike, though initially perceived as a wage strike by the mining workers appears to have been a
climax of the more problems the workers experienced in the mining sector as a result of the corporate governance
approach that is shareholder value oriented and fails to adequately consider the interests of other stakeholders such as
the mine workers and the mining communities. In the aftermath of the Marikana massacre, the Department of Trade and
Industry Minister, Mr. Rob Davies described the conditions in the mines as appalling and stated that the mining
companies who make millions had questions to answer about how they treat their workers.
1
The International Labour
Organization
2
also criticized the working conditions of the miners saying they are exposed to a variety of safety hazards
such as falling rocks, exposure to dust, intensive noise, fumes and high temperatures, amongst others.
3
These
observations points to the danger of shareholder value oriented corporate governance.
Shareholder value oriented corporate governance requires a company to be run in such a way as to maximize the
interests of the shareholders ahead of the interests of any other stakeholders. In terms of this view, a director has no
general duty to consider the interests of stakeholders. Obviously directors are allowed to consider the interests of
stakeholders and sometimes good management will require this, but ultimately the interests of stakeholders are
subordinate to those of the shareholders. While the shareholder value approach has often been taken for granted it is
increasingly being questioned. There is pressure on companies and directors to take into account not only the
shareholders when they manage a company, but rather the interests of all stakeholders.
This article examines the Marikana miners’ strike through corporate governance lens. The strike raise concerns on
the shareholder value oriented corporate governance as it reveals the harsh realities being faced by stakeholders such
as the mine workers and the communities in which the mining companies operates. It will be argued that the Marikana
miners’ strike reinforces the argument for stakeholder oriented corporate governance. Consequently, thematic lessons
1 Corporate Watch, “Blood Money, Shock Revelations and Media Half-Truths on South African Mine Violations” (2013) available at
http://www.corporatewatch.org/?lid=4741, accessed on 25 March 2013.
2 Hereafter, the ILO.
3 See The ILO news, available at http://www.ilo.org/global/about-the-lo/newsroom/news/WCMS_187783/lang --en/index.htm, accessed
on 22 January 2013. The ILO mining specialist Martin Hahn stated that while South Africa has taken significant steps since the end of
apartheid to address working conditions in the mining industry, there is still a lot of room for improvement.
E-ISSN 2039-2117
ISSN 2039-9340
Mediterranean Journal of Social Sciences
MCSER Publishing, Rome-Italy
Vol 5 No 2
January 2014
64
are extracted from the strike, from a corporate governance perspective.
2. Background of Mining in South Africa
Historically, mining has been central to the South African economy.
4
The structure of the South African economy,
whereby the mineral and energy complex is the main driver of the economy, first emerged out of the discovery of gold
and diamonds in the late nineteenth century. South Africa holds a major economic and physical presence on the African
continent and the world at large regarding mining. About a quarter of South Africa’s exports come from mining. South
Africa ranks number five in the world in gold production.
5
It is the largest producer of platinum in the world.
6
It produces
80% of the world’s platinum.
7
Mining has been the mainstay of the economy and has contributed significantly to the
industrial development of the country.
8
In the past 10 years, the development of export-oriented value-added processing
aluminium, ferro-alloys, steel, and titanium industries has become an important component of the mineral economy of
South Africa.
9
The development of these value-added industries along with an expansion in coal exports and an increase
in Platinum Group Metals prices has helped compensate for the declining contribution of gold in the economy.
10
3. The Marikana’s Miners’ Strike
The expansion of the mining companies in South Africa was driven inter alia by the availability of the supply of cheap
labour that ensured that healthy profit margins could be attained. During the twentieth century mineworkers epitomized
apartheid’s oppression and exploitation of black labour. Thousands of miners died in work-related incidents during the
pre-1994 era. Mineworkers were cheap, migrant black workers drawn not only from the hinterlands of South Africa but
from the entire region, from countries such as Botswana, Malawi, Mozambique, Zambia and Zimbabwe. Post-1994,
nothing much has changed for the mine workers who are still being paid appalling wages as evidenced by the Marikana
miners’ strike.
The strike began with the demand by approximately three thousand rock drillers to have salaries increased from
R4 000 per month to R12 500 per month.
11
These workers walked off the job after the mining company (Lonmin
Platinum) management failed to meet with the workers. A series of violence then followed leading to the massacre that
occurred on 16 August when at least thirty six miners were killed and seventy eight wounded by members of the South
African Police Service (SAPS).
12
For communities around the platinum mines as has been well documented in a number of studies by the Bench
Marks Foundation,
13
life is harsh. The majority of the people in these communities live in tiny houses or shacks, with no
access to clean water or decent sanitization. According to the Bench Marks Foundation, the water sources surrounding
4 See State Intervention in the Minerals Sector, ANC Policy Discussion Document 2012 available at http://cdn.bdlive.co.za/images/pdf
/ANCMineralsdisc.pdf, accessed on 12 January 2013.
5 See, “China, Ghana gold production spike, others fall” available at http://www.mining.com/world-gold-production-2012-preliminary-
results-71758/, accessed on 16 February 2013. South Africa was the world's largest gold producer until 2007 when China became the
largest producer of gold. China continued to increase gold production (extraction) and remained the leading gold-producing nation in
2009, followed by Australia.
6 See Platinum Today, available at http://www.platinum.matthey.com/about-pgm/production, accessed on 12 March 2013.
7 See “What South Africa Means To The Platinum Market” accessed on 10 March 2013 available at http://commodityhq.com/2012
/what-south-africa-means-to-the-platinum-market/
8 See National Accounts, Statistics South Africa, available at http://www.statssa.gov.za/publications/D04052/ D040522008.pdf,
accessed on 10 January 2013.
9 Ibid.
10 See National Accounts, Statistics South Africa, available at http://www.statssa.gov.za/publications/D04052/ D040522008.pdf,
accessed on 10 January 2013.
11 See, “Echoes of the past: Marikana, cheap labour and the 1946 miners strike” accessed on 11 October 2013, available at
http://libcom.org/files/Echoes%20of%20the%20past%20Marikana,%
20cheap%20labour%20and%20the%201946%20miners%20strike.pdf
12 De Vos P, “Some Thoughts on the Marikana Massacre,” accessed on 25 September 2012, available at
http://constitutionallyspeaking.co.za/some-thoughts-on-the-marikana-massacre.
13 See the following studies: The Bench Marks Foundation, “A Review of the Corporate Social Responsibility Programmes of the
Platinum Industry in the North West Province,” (2007); “Review of the Corporate Social Responsibility Programmes of the Platinum,
Coal, Gold and Uranium Mining Sectors in South Africa,” (2008); “A Review of Platinum Mining in the Bojanela District of the North West
Province” (2012) – all available at http://www.bench-marks.org.za, accessed on 10 September 2012.
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the townships and informal settlements are often heavily polluted partly from the mining activities.
14
In this regard, it
would not be an overstatement that the Marikana miners’ strike was fuelled by the fact that while most mineworkers lived
in appalling conditions in informal settlements around the mine, the companies were making huge profits and serving the
interests of shareholders while turning a blind eye to the concerns of the mine workers and the Marikana community in
which the mining activities took place. Mine workers felt exploited and this was a motivation for the violence.
15
They were
huge frustrations among workers, from whose perspective the mining industry and employers continue to become rich,
while they sweat underground, face death on a daily basis and sink deeper into poverty.
16
Furthermore, the few services that are provided by the mining companies through corporate social responsibility
programmes are reported to be mostly of an appalling standard.
17
According to the Bench Marks Foundation report, the
corporate social responsibility programmes in the platinum belt are “top-down, designed by experts and imposed on
communities and there is very little evidence that communities, as stakeholders, are actually consulted about their needs,
or about their frustrations concerning the impact of mining operations on their lives.”
18
The Bench Marks Foundation
criticized the high profits when compared with the low wages of the workers. According to the Bench Marks Foundation
the benefits of mining are not reaching the workers or the surrounding communities.
19
4. Thematic Lessons from the Marikana Miners’ Strike
The Marikana miners’ strike has had a significant impact on the corporate governance landscape in South Africa.
Perhaps one of the biggest ramifications of the massacre, aside from the tragic deaths of so many, is the revelation of
the shortcomings of shareholder value oriented corporate governance. The strike also highlighted the need for
stakeholder oriented corporate governance. The ensuing discussion highlights, from a corporate governance
perspective, thematic lessons extracted from the Marikana miners’ strike.
4.1 Employees Should be Viewed as Key Stakeholders
Employees, like shareholders, contribute to the corporation. Shareholders contribute financial capital and employees
contribute "skill, time and effort"(or human capital).
20
Given that both groups are investors in a company, and if we are to
accept the premise of the stakeholder approach that each group of stakeholders merits consideration for its own sake,
then there is perhaps a strong argument to be advanced for the equal treatment of employees and shareholders. Many
benefits accrue in a situation where the interests of employees are considered in corporate governance and there is
employee involvement.
21
For instance, by giving due consideration to the interests of employees in corporate
governance, directors may help guarantee a company's long-term profitability and survival.
22
A company’s potential to be
more profitable would be enhanced as trust
23
between the company and the employees will induce employees to take
steps against their short-term self-interest in order to secure the long term future of the company, and therefore, their job
security.
4.2 Directors’ Decisions Should be Cost Effective in the Economic, Social and Environmental context
Cost and revenue appears to be crucial or central elements of business. Hence liquidity, profitability and solvency are
key accounting elements that usually say aloud about the future economic status of a company and reach to the point of
14
The Bench Marks Foundation, “Communities in the Platinum Fields” available at http://www.bench-marks.org.za/research/rustenburg
_review_policy_gap_final_aug_2012.pdf accessed on 10 September 2012.
15
Ibid.
16
Coleman N, “More Questions Than Answers,” Mail and Guardian, 26 October – 1 November 2012.
17
The Bench Marks Foundation, “Communities in the Platinum Fields” available at http://www.bench-marks.org.za/research/rustenburg
_review_policy_gap_final_aug_2012.pdf accessed on 10 September 2012.
18
Ibid.
19
See - The Bench Marks Foundation, “Communities in the Platinum Fields” available at http://www.bench-marks.org.za/research
/rustenburg_review_policy_gap_final_aug_2012.pdf, accessed on 10 September 2012.
20
Greenfield K, “The Place of Workers in Corporate Law” (1998) 39 B.C.L. Rev. 283.
21
Lutter M, “The German System of Worker Participation in Practice” (1982) Journal of Business Law 154.
22
Ibid.
23
See Blair MM and Stout LA, “Trust, trustworthiness and the Behavioural Foundations of Corporate Law,” (2001) 149 U.PA.L.Rev 1735
1809 – these authors suggest that there is reason to believe that trust plays an important role in the success of many companies.
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understanding as to whether a company would meet the expectations of its shareholders. The key element of
shareholders’ expectations is to earn significant amount of profit or net income from their investments thereby increasing
their wealth. Their expectation is legally valid and ethically justifiable as they injected capital into the company with the
aspirations of profit. However, while the moral legitimacy of the claim that shareholders have certain expectations
because of their investments is accepted, the same basic claim should be extended to all those who invest in the
company inter alia employees, creditors, customers and the community. Prioritizing the interests of shareholders while
prejudicing the interests of other stakeholders virtually undermines the status of the shareholders as unsatisfied
stakeholders may begin disassociating with the company in achieving its corporate goals resulting in the loss of
sustainable competence. In this regard, it is recommended that as companies now operate in the triple context which
demands focus not only on profits but also on people and the planet, directors should make decisions which are cost
effective in the economic, social and environmental context.
4.3 Directors Should Make Stakeholder Oriented Decisions
Good corporate citizenship requires that directors make stakeholder oriented decisions. By this is meant that the board
should take account of and respond to the legitimate interests and expectations of stakeholders linked to the company in
its decision-making. Although it may be virtually difficult or impossible to satisfy all stakeholders to the extent of their
expectations, directors must trade off their choices so that potential disappointments on the part of any stakeholder would
not arise or at least each stakeholder may be convinced on the choices of directors’ decisions by understanding
directors’ realistic inability to satisfy their hundred percent expectations. Due to the fact that corporate reputations are
formed out of the aggregate perceptions of stakeholders’ assessments of the companies, stakeholder oriented decisions
have the potential to penetrate the investors’ confidence.
4.4 Directors Should Give Due Regard to Sustainability Considerations
Companies cannot operate in an economically viable manner over a prolonged period without due regard for long-term
sustainability issues. When making decisions, directors should therefore, ensure that the needs of the present are met
without compromising the ability of the future generations to meet their needs. Hence the success of the company should
be viewed in terms of lasting positive impacts for business, society and the environment. Sustainability is one of the
principles for good business and corporate governance that maintains the balance between capitalism and greed in
relation to the impact of business decisions on economic, social and environmental issues in communities world-wide.
4.5 Directors Should Carry Out Human Rights Impact Assessments
Good corporate citizenship inter alia dictates that companies should comply with their human rights responsibilities. To
this end, the board should carry out human rights impact assessments before making a decision and after carrying out
the objectives of the decision. The process entails assessing actual and potential human rights impacts, acting upon the
findings and communicating how impacts are addressed. Human rights impact assessment should be an on-going
exercise, recognizing that human rights risks may change over time as the company’s operations and operating context
evolve. Companies should have processes in place to enable remediation in situations where a human rights impact
assessment or other means reveal that the company has caused or contributed to an adverse impact.
4.6 Directors Should Carry Out Environmental Impact Assessments
The board should carry out environmental impact assessments before making a decision and after carrying out the
objectives of the decision. An environmental impact assessment is a pro-active and systematic process where potential
environmental impacts both positive and negative associated with certain activities of a company are assessed,
investigated and reported. The process contributes to giving effect to the objectives of integrated environmental
management as decision makers are informed of the desirability of such activities and on the conditions which
authorization of the activity should be subjected to, where relevant.
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4.7 Companies Need to Address Workers’ Economic/Financial Illiteracy
Given the harsh conditions facing mining workers as highlighted, it is beyond dispute that they are justified in demanding
higher wages. However, while that is the case, demands for higher wages should take into account the economic
climate, as companies in sectors that are struggling due to the weak economic growth environment may only be able to
afford inflation-linked wage increases. The failure to understand the economic reality that some companies in certain
sectors may only be able to afford inflation-linked wage increases means workers will make and continue making
unrealistic wage demands because they believe it is attainable. The unfortunate effect is that where settlements are
above what the economy can afford, there could be job losses. An understanding of the economic context within which
their companies operates would therefore, better inform the wage demands of workers.
5. Conclusion
While mining companies are important and powerful players in today’s world, mining activities often leave irreversible
social, economic and environmental impacts on various stakeholders such as for example the communities in which
mining activities takes place. In this regard, companies should therefore be socially responsible. Companies are an
integral part of society and they have a clear stake in ensuring that workers for example are inter alia treated properly,
receive fair and equitable wages and work under safe conditions. The downside of no or inadequate social responsibility
is not increased costs or reduced profits but legal liability. Companies can no longer get away with social irresponsibility.
There is thus need for directors to assess the impact of their actions on those whom their business affects and endeavor
to minimize harm and do what good they can. As this is achieved, the company earns the necessary approval, its licence
to operate, from those affected by and affecting its operations.
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