A BOLD experiment in worker ownership in South Africa’s coal mining industry is teetering on the brink of collapse as the Arnot Opco Coal Mine in Mpumalanga struggles to secure funding and resume full operations.

The mine, acquired by a group of retrenched workers after its former owner, Exxaro, ceased operations in 2015, has become a symbol of hope and resilience for more than 1 000 former employees.

But that hope is now fading as financial troubles, legal battles, and the global shift away from coal threaten to derail the project.

The mine’s plight was laid bare during an oversight visit by the Portfolio Committee on Mineral and Petroleum Resources to the Steve Tshwete Local Municipality this week. The committee heard that Arnot Opco, once a beacon of worker empowerment, is now under business rescue and embroiled in a court battle with its former shareholder, Wescoal, which failed to deliver R150 million in promised funding.

“Wescoal committed to providing R150 million, but they failed to make this funding available,” Arnot Opco management said during the visit. “This, combined with the impact of the Covid-19 pandemic, has left us unable to operate the mine fully.”

The story of Arnot Opco began in 2015, when Exxaro retrenched 1 500 workers after losing its coal supply contract with Eskom. Determined to take control of their futures, eight former employees formed Innovators Resources and approached Exxaro to take over the mine.

They established a trust to benefit 1 029 other retrenched workers and partnered with Wescoal, then a JSE-listed company, to secure funding and expertise.

However, the dream of worker ownership has been marred by setbacks. Wescoal’s failure to provide the promised funding, compounded by the economic fallout of the Covid-19 pandemic, left the mine unable to operate at full capacity.

Today, no mining takes place at Arnot Opco. Instead, the company buys coal from third parties, washes it, and sells it to clients—a far cry from the vision of a thriving, worker-run operation.

The mine’s struggles are emblematic of broader challenges facing South Africa’s coal industry. Lenders are increasingly reluctant to fund distressed companies, particularly those in the coal sector, as global investors pivot towards clean energy.

This shift has left Arnot Opco stranded, unable to secure the capital needed to reopen the mine and create jobs for the very workers it was meant to empower.

“It is very difficult to raise funding right now,” said Arnot Opco management. “Lenders are hesitant to support companies in distress, and coal projects are particularly unpopular due to the global move towards clean energy.”

Committee Chairperson Mikateko Mahlaule expressed his support for the worker-owned model but emphasised the need for accountability. “The last thing we want is to see this transaction fail,” he said. “We want the mine to be a success. This is a model we have not seen before, and it must succeed. You must also have regard for the community and not just extract and leave.”

The committee’s visit highlighted the human cost of the mine’s struggles. Many of the retrenched workers who pinned their hopes on Arnot Opco remain unemployed, and their futures are uncertain. Plans to appoint contractors to reopen the mine and create jobs are underway, but without significant funding, these efforts may prove futile.

The oversight visit also shed light on wider issues in Mpumalanga’s coal mining sector. Community leaders and traditional authorities accused some mining companies of failing to comply with Social Labour Plans (SLPs), which are designed to ensure that mining benefits local communities.

“These companies commit to SLPs just to get mining rights, but they have no intention of implementing them once they start making profits,” said one community leader during the visit.

Mahlaule echoed these concerns, saying: “It is unacceptable for companies to make promises and commitments just to get mining rights and then fail to live up to them.”

The committee also expressed concern over reports of mass retrenchments in the province, with labour unions accusing mining companies of replacing permanent employees with contract workers. “Mining companies are retrenching permanent workers and pushing them into contract work,” said a union representative. “This undermines job security and workers’ rights.”

social labour pains

Funding crisis threatens workers' Mpumalanga mine