IN A time of economic uncertainty in South Africa, the little town of Kathu, on the edge of the Sishen iron-ore mine, is a boom town. So are the towns in the Northern Cape sending workers to the country's largest iron-ore mine.
Kumba Iron Ore, which is 65% held by Anglo American, paid more than 6000 workers R500000 in an employee share ownership scheme that vested after five years in December last year.
The town of Kathu, once a sleepy little backwater, is thriving, with all businesses reporting thriving trade as cash-flush Sishen workers spend and spend.
Furniture and electronic goods retailers, car dealers, jewellers, grocers and liquor sellers are reporting a fantastic pick-up in business.
Property prices have skyrocketed, not only as the workforce at Sishen swells with contractors, but as other iron-ore and manganese mines start up and people stream in to build and run them.
However, the outlook for those not working for Sishen and securing such cash handouts is a little less rosy and they are unable to participate in the boom times.
Kathu's OK Furniture, part of the JSE-listed Shoprite Holdings, reported sales of R800000 more in December last year compared with 2010, and business is still ticking over nicely, says store manager Carike Griessel.
"This branch opened in 2007 and this is the best we've ever done," she says.
The shop, with its beds, furniture and electronic goods such as flat-screen television sets and sound equipment, is exceeding targets, she says. The bigger Kuruman store, about 60km away, is also doing a roaring trade. A large number of Sishen workers live near Kuruman.
"People walked in here with cash, tens of thousands of rands, and paid for what they wanted. It is not ideal for us because we make more money on credit purchases and we have to work on converting that business to credit," she says.
The Spar convenience store and its affiliated liquor outlet, Tops, which are the anchor tenants in Kathu's mall, have also seen a startling increase in sales, with the store's turnover growing 58% year on year and the bottle store reporting 64% growth, says manager Rudi Botma. "This growth wasn't all due to the Envision (share ownership scheme) payment. The town is growing very quickly as well."
Tops has seen an increased demand for expensive liquor, particularly whiskies, he says. "Guys are just consuming more. They also bought cars and TVs."
A drive around the parking lot at the new mall shows where some of the cash went.
There are new cars that would blend in in a Sandton mall. A car dealer says his branch and the main office in Kuruman sold 41 cars in December, but sales had tapered off.
Anecdotes are told of car dealerships in neighbouring big towns such as Kuruman, Kimberley and Up ington being swamped with demand and drawing up waiting lists for new cars. A wheel-and-tyre dealer had to organise special deliveries of fancy rims to keep up with demand.
A manager at an upmarket clothing retailer says she has recorded an 80% improvement so far this year on last year's sales over the same period.
"There's been a hell of an improvement. It is obviously because of that payment the mine made to its workers," she says, declining to be identified.
"Since I've been here we've made our target and more. Normally, everyone is broke in January, but it's not like that in Kathu. This is something else. If you stay here it's just about money and cars," she says.
A jewellery store manager says she's also seen increased buying, with wedding and engagement rings a popular choice.
Kumba says it has spent R1,2m on giving its workers financial advice, strongly urging restraint and sensible choices in dealing with the windfall. The payout was taxed according to the worker's existing tax bracket, rather than the top rate.
One Kathu woman says her family has paid off the mortgage, bought two used cars, given their children a Christmas to remember, and banked the rest.
A miner at Sishen says he has paid off all the family's debts, which means there is more disposable income each month, which has contributed to an overall improvement in living standards. "You mustn't forget that there was a bonus payment in February as well as a dividend payment, which gave guys at least R17000 extra," says a senior official at the mine.
"The employees at this mine are a little windgat now, but how can you not be windgat with all that cash?" he says. "If anything, it's made guys more loyal to the company and we are getting a lot of requests from people wanting to come work here now.
"Sure, a lot of the youngsters bought cars and sound systems and are having a good time, but for the older guys that money is safely in the bank," he says.
"The guys here never suffered with the economic downswing because Kumba was selling ore to China through the hard times. These guys don't know what the real world is like. If the bad times come, they are going to be like millionaires who suddenly have to live on R100," he says.