Neo-liberalism, Then and Now: A Tale of the Chilean Mineworkers, Their President and a South African Mining Company

By Leonard Gentle · 28 Oct 2010

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Picture: SACSIS via RT
Picture: SACSIS via RT

The successful rescue of the Chilean workers trapped in the San Jose mine was a story of extraordinary courage and self-organisation on the part of the miners, as well as of exceptional engineering expertise on the part of Codelco and the international coalition of forces that hoisted the miners to safety.

Across the world’s media, we were treated to stories of the mineworkers singing the Chilean national anthem and images of the Chilean president, Sebastian Piñera, hugging the rescued miners whilst his labour minister, Laurence Golborne, co-ordinated the rescue operations.          

Accolades came from one and all globally, including from South Africans. Also receiving kudos for their part in the rescue was South African company, Murray and Roberts. This made many a South African chest swell with pride. "We are very privileged to have been a part of this process and it’s a feather in our cap, as South Africans are leaders in underground mining," Murray and Roberts’ spokesman, Ed Jardim, said in an article released by Sapa.

While celebrating this rescue is commendable, there is another story that emerges from this experience, which tells us much more about changes to capitalism in the last 30 years. This story speaks very much to current questions confronting us in South Africa. Questions, such as: Why does the current record gold price not translate into a boon for ordinary people? Why do mining deaths continue unabated? How is it that we have some of the most successful companies in the world, but can’t provide jobs and decent public services? And why does our government remain enthralled by an economic policy that places speculators above its people and electoral mandate?

This is a story that starts with the CIA-organised overthrow of the elected left wing Chilean government of Salvadore Allende on 11 September 1972. This is the coup that brought the dictator, Augusto Pinochet, to power.

Soon after the coup, in a project affectionately referred to by controversial former American Secretary of State, Henry Kissinger as the “Chicago Boys,” the Pinochet regime in collaboration with the United States of America (US) brought in economists and administrators from the University of Chicago who were devotees of what in those days were still just the obscure neo-liberal theories of Milton Freidman. Friedman was later, proudly, to declare that they had a unique opportunity to put their theories into practice in what was really a tabula rasa for the architects of neo-liberal policies such as privatisation, financial deregulation and the outsourcing of public sector functions.

Of course, the real reason there was no opposition to the experiments of the Chicago Boys was because the opposition were all killed off in the Chilean national stadium by Pinochet’s thugs. Pinochet is notorious for ordering the murders of thousands of activists in Chile between 1972 and 1990.

Under Pinochet, Chile became the forerunner and prototype of neo-liberalism. Its “successes” inspired former British and US heads of states, Margaret Thatcher and Ronald Reagan, both ill-famed for unleashing neo-liberalism as economic orthodoxy globally via the International Monetary Fund (IMF) and the World Bank.

After the coup, Pinochet and his Chicago Boys did their best to dismantle Chile's public sphere, auctioning off state enterprises and slashing financial and trade regulations. Enormous wealth was created in this period, but at a terrible cost. By the early 1980s, Pinochet's Friedman-prescribed policies had caused rapid de-industrialisation, a tenfold increase in unemployment and an explosion of distinctly unstable shantytowns.

They also led to a crisis of corruption and debt so severe that in 1982, Pinochet was forced to fire his key Chicago Boy advisers and re-nationalise several of the large deregulated financial institutions and crucially, for the events that played out recently, Chile’s largest copper mine, Codelco.

But Pinochet also deregulated critical areas of what the Chicago Boys castigated as “unnecessary red tape,” including regulations covering health and safety requirements in mining. He stopped short of deregulating Chile’s building code, which was extremely fortunate given Chile’s recent earthquake.

Among the beneficiaries of this new trough of feeding on the privatised mines was the Minister of Mines under Pinochet’s regime, Jose Piñera and his younger brother, Sebastian Piñera. José Piñera pushed through a Constitutional Mining Law in 1981, clearing the way for the privatisation of much of Chilean mining, thereby creating the conditions for a sharp deterioration in safety conditions.

The younger Piñera became a billionaire on the back of the conditions created by Pinochet and years later got himself elected as Chile’s president -- and became hero of the day embracing the rescued miners, as they were lifted out of their sarcophagus.

Chile is the world’s largest producer of copper, which makes up 40% of the country’s exports. Unlike in South Africa where deep level mining has always been the order of the day, for most of Chile’s history, copper mining was conducted as opencast mining because the copper-ore was easily accessible in surface reefs. With the deregulation of the regulatory regime on mining and the recent increase in the prices of a whole range of resources – gold, tin, nickel and copper – there has been a massive growth in the number of mines in Chile. Critically, Chile began to pursue deep level mining as well.

As a result, the accident that trapped the miners of the San Jose mine is not unusual. The frequency of mining disasters has kept pace with prices and profits. There are, on average, 39 fatal accidents every year in Chile's privatised mines.

The recently elected right wing president, Piñera, announced soon after his inauguration that he would be privatising Codelco. This unleashed a storm of protest in Chile with trade unions vowing to do whatever was necessary to resist such a move.

The San José mine itself has a record of 80 accidents. In 2004, a miner died after a cave-in. In 2006, a truck driver in the mine was also killed in an accident. That same year 182 workers were injured, 56 of them seriously. The mine was closed in 2007 after a rock explosion caused the death of a geologist. The owners were charged with involuntary manslaughter, but the case was dropped in 2008 after they agreed to pay the family some US$170,000 in compensation.

A condition for reopening the mine was that holding company, San Esteban, commit itself to constructing a ladder that would lead from the shelter to the surface. Following a cave-in, miners tried to reach the surface through a ventilation shaft. They got only a third of the way up before discovering that the mine owners had never bothered to finish the ladder to the top.

The San Jose mine became so unsafe in 2007 it had to be closed -- but not for long. On 30 July 2010, a labour department report warned again of "serious safety deficiencies," but Piñera’s minister of mines took no action. Six days later, the now famous 33 miners were entombed.

To complicate matters, the company, San Estaban, was in financial difficulties, sued by creditors, it had served notices of retrenchment to fellow employees of the 33 trapped miners. That announcement has temporarily taken a backseat to the drama around the rescue of the trapped miners, but will resume now that the miners are safe.  

In the meantime, Chile’s privatised mining riches have invited a range of multinational companies.

South African corporations are key beneficiaries of Pinochet’s dictatorship and Chile’s uncontested neo-liberalism.

All the big mining companies, notably Rio Tinto and South Africa’s giants, such as Anglo American have bought in. Added to that list is African Rainbow Minerals (ARM), the BEE compliant version of South Africa’s old Anglovaal, with Patrice Motsepe as the BEE partner. Anglo American Chile accounted for 41% of the Anglo American group's total operating profits in 2009, according to CEO for the copper branch, John Mackenzie.

And, with our long history of deep-level mining South African companies are becoming the “gold standard” for deep-level mining globally. As a result, engineering and construction company, Murray and Roberts, has re-invented itself as a company, which also focuses on mining. However, not as an owner of mines, but as a service provider that digs and maintains mine shafts. Consequently, Murray and Roberts has taken over a Canadian company, Cementation, and also set up mining companies in Chile.

Murray and Roberts was therefore well placed to provide assistance with the capsule design and digging in Chile. All to the benefit of the trapped miners, you might say.

But what about mine-safety in South Africa?

South Africa’s record of mine fatalities is appalling. This is despite the fact that the average number of mineworkers dying in South African mines has decreased from 221 mineworkers in 2007 (at a rate of about four workers a week) to 165 by 2009, according to the Department of Mineral Resources. So far, in 2010 the death toll already stands at 97. South Africa's deep gold mines are the most dangerous, accounting for some 46 fatalities this year, while 24 deaths occurred in platinum mines.

The South African angle of the rescue mission tells us so much about ourselves and our parallels with Chile. Like Chile, the roots of neo-liberalism were dug here by a violent repressive regime when the apartheid government privatised Iskor, commercialised Eskom and Transnet, and ended public housing, thereby laying foundations upon which a new democratic government was happy to build and embellish with its own, pro-business, GEAR policy.

Since 1994, South African corporations like Anglo American, Old Mutual, SAB Miller and so on have relocated, gone global and become “world class.” This relocation was done with the assistance of an ANC government that ensured Reserve Bank permission, relaxed capital controls and encouraged a favourable exchange rate to make their relocation worthwhile. In return, South Africa now has to pay out profits and dividends externally, leaving us with an ongoing balance of payment problem.

Murray and Roberts have joined Anglo in Chile. There they have helped to rescue trapped workers. But all this “world-class” expertise cannot be harnessed to provide mine safety to workers here, or a sharing in the resources boom that has seen the gold price break all records.

Gentle is the director of the International Labour Research and Information Group (ILRIG), an NGO that produces educational materials for activists in social movements and trade unions.

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