High-profile owners abandon South African gold miners

Relatives and associates of current and former leaders are accused of neglect by workers who claim unpaid wages and squalid living conditions.

Miners wait to get debit cards at Teba Bank, owned by the union, as they wait for the mine owners to pay missing salaries.

GROOTVLEI, SOUTH AFRICA // The foul stench emanating from the lavatories at the workers' hostel in Grootvlei could easily be detected outside the building. The water had been cut off for weeks because the mining company had failed to pay its bills.

"It's full of worms," said Johannes Nhlabatsi, 46, from Swaziland, explaining that the employees had been reduced to walking to nearby fields to relieve themselves. "This is going to give us some sickness. Even the people who are in prisons, they are better than us." Almost 2,000 miners, who earn from around 1,200 rands to 1,500 rands a month (Dh580 to Dh720), live seven to a room in the hostel, an unusually pleasant series of single-storey buildings set around grassy lawns, with a huge yellow mound of tailings towering over the area. Those who live out there are supposed to receive an allowance of an extra 540 rands for doing so.

But workers at the gold mine, on the East Rand an hour from South Africa's commercial capital, Johannesburg, went on strike after their wages for February and March went unpaid for weeks. As well as not having running water, the hostel canteen has closed, leaving them to fend for themselves for food, and several protests have been held, at least one of them turning violent and police having to use tear gas to disperse demonstrators.

The dispute is a vivid illustration of the vast disparities between the elite and the poor in the new South Africa. The chairman of the firm operating the mine, Aurora Empowerment Systems, is Khulubuse Zuma, a nephew of Jacob Zuma, the president. Its managing director is Zondwa Gadaffi Mandela, a grandson of Nelson Mandela. Another director is Michael Hulley, the president's personal lawyer. Set up with ambitions to become a force within South Africa's lucrative mining sector, the founders' connections have failed to prevent Aurora from falling victim to cash flow difficulties.

"Those people are robbing us," said David Mofusi, 42, from Lesotho. "They are not fair. We are suffering." Aurora took over Grootvlei from the liquidators of Pamodzi, a bankrupt mining firm, with a view to buying it and the company's other gold-producing assets. Pamodzi had repeated problems raising finance, and the mine itself has flooding in some of its shafts. But according to a senior manager at Grootvlei - whose salary had also been delayed, and who did not want to be named - the water is under control and the Grootvlei is economically viable. He said the mine's ore yields three to 3.5 grammes of gold per tonne of rock, which is suitable for the low-cost operation.

He blamed bad management for the situation with the workers. Aurora owed electricity and water suppliers, along with other contractors, millions of rands, he said. "It's management. Aurora made good promises which they have not kept up to. It's unbelievable. "They have got no interest in mining whatsoever. They want to move in, get as much money [as they can] here and pull out." The firm denies such claims, and said it had paid the workers their salary, although he did not offer any proof. "The problem we have been having is when we got into the mine the assets were very much stressed," said Thulani Ngubane, its commercial director. The mine was losing 30 million rands a month he said, and proposed investors pulled out. "The money we had earmarked was eaten up by other projects," he added.

Even before work stopped, production fell from 120kg of gold in December to only 20kg in January. "Somehow the guys went very lazy," he said. "They are not giving 110 per cent in their work. The guys went stupid; they went on strike. I'm happy they have now suffered in themselves. It's not only us who have suffered." Everyone had a right to go into business, he added, and said: "We don't foresee that it has any impact on President Zuma."

But Aurora's website is not entirely open about the directors' family connections. Khulubuse Zuma is described only as a prominent businessman in KwaZulu-Natal, the Zumas' home province, with "interests across the African continent". It is a little more candid about Zondwa Mandela's role, saying that at 26 he has an "ambition to do an MBA" - something most CEOs achieve before reaching their posts - and claiming that "his diverse network and access to high-end individuals would prove to be a great aid in the prospects of business interests".

At the end of April, Aurora announced that it had secured new funding of 725m rands from Swiss-based investors, which would ensure the future of its operations. But according to reports, the money may not be paid until a subsidiary floats on the stock market, which may take some time, and the authorities are said to have opened an investigation into the company for not making payments to South Africa's compulsory unemployment insurance scheme - allegations it also denies.

The vast majority of the residents of the Grootvlei hostel are foreigners, BaSotho, Swazis and Mozambicans who have been drawn to the mines to work, even for such paltry incomes, because of the absence of paid employment in their home countries. Some are South African, and their anger is a clear indicator that the situation could become a liability for Mr Zuma. The trade union federation Cosatu is increasingly unhappy with Mr Zuma's centrist approach to economic policy, and with corruption in the African National Congress, with which it is in a formal, but troubled, alliance. The role being played by his nephew at Grootvlei will do nothing to help.

"The nephew just came here to take our money that we work for under the ground. They just come here to get profit for themselves. Really he [Zuma] must act against these people," Theboho Moloki, 25, said. @Email:[e-mail]