Tags: South Africa | Gold Producers | Strikes | Mineworkers

South African Gold Producers Brace for Mineworker Strikes

Wednesday, 28 August 2013 12:31 PM

South African gold producers are preparing for bruising strikes that could start as early as Sunday, with some companies planning for stoppages of up to three months in a high-stakes fight between capital and labor in Africa's biggest economy.

The National Union of Mineworkers (NUM) will give gold producers on Friday 48-hours' notice of its members' intention to strike over deadlocked wage talks, a source with direct knowledge of the matter said on Wednesday.

"The decision to issue a strike notice on Friday has now been taken," the source, who asked not to be identified, told Reuters. Workers could then begin stoppages from the Sunday night or Monday morning shifts in the country's gold mines.

A complete shutdown of the gold sector could cost South Africa more than $35 million a day in lost output, according to calculations based on the spot price.

This will pile pressure on a struggling economy already weighed down by a slew of ongoing strikes in auto manufacturing, construction and aviation services, and facing threatened stoppages by textile workers and petrol station employees.

On Saturday, NUM gave bullion producers, including AngloGold Ashanti, Gold Fields, Sibanye Gold and Harmony Gold, a seven-day ultimatum to meet its demand for pay rises of up to 60 percent or face strike action.

The country's Chamber of Mines, which negotiates on behalf of gold producers, said on Tuesday it had made a final offer to unions to increase basic wages by between 6 and 6.5 percent.

NUM, which represents 64 percent of the country's gold miners, dismissed this offer. Another more militant mining union is seeking pay hikes as high as 150 percent.

The companies say these demands are unrealistic as they are being badly squeezed by rising costs and falling bullion prices.

South Africa's declining gold industry was caught off guard last year when violent wildcat strikes spread from platinum to gold shafts, costing 5 billion rand ($500 million) in lost output. The strife in the mines, rooted in a union turf war, dented economic growth and led to sovereign credit downgrades.

This time round, the companies plan to be better prepared.

"We have planned for a three-month strike ... are prepared for that level of disruption," said James Wellsted, spokesman at Sibanye Gold.

Experts say producers can shut down costly power-intensive functions such as underground ventilation, mine high-grade deposits with skeleton staff and maintain some surface activity.

The gold companies are also increasing security, preparing for the possibility of violence after more than 50 people were killed last year in clashes in the mines, including 34 striking miners shot dead by police at the Marikana platinum mine.

The labor mayhem raised questions about the ability of President Jacob Zuma's ANC government to manage social tensions fuelled by poverty, inequality and unemployment affecting millions of South Africans 19 years after the end of apartheid.


Wage talks are deadlocked with other unions as well, including NUM's more hardline rival the Association of Mineworkers and Construction Union (AMCU), which wants wage hikes of up to 150 percent for the lowest-paid miners.

"We're not ruling out a strike but we need to consult with members first," AMCU General Secretary Jeffrey Mphahlele said.

Of the producers, Sibanye is the more exposed, because South Africa accounts for all of its production. But it said in its first half results it had $200 million in cash resources, which can help it to ride out a prolonged stoppage.

Its rivals also have deep pockets and capital resources. "All of them have enough cash to get through this," said David Davis, banking investment analyst at SBG Securities.

Zuma's government, which denies charges by critics that it has paid more attention to the country's wealthy business elite than to the masses of workers, poor and unemployed, has called for all sides in the labor disputes to avoid violence.

"Parties must engage and negotiate in good faith," said Nkosinathi Nhleko, director general in the Department of Labor.

South Africa has some of the most conflict-ridden labor relations in the world, studies show, reflecting big inequalities between a super-rich elite and comfortable middle class and a large majority of citizens struggling to get by in the face of rising costs of transport and living essentials.

The country ranks last among a list of 144 countries in terms of cooperation in labor-employer relations, according the World Economic Forum's Global Competitive Index for 2012-13.

The index also ranks South Africa as having some of the world's most rigid laws in terms of hiring and firing, a factor which puts off foreign investors who could create needed jobs.

Productivity measured against global competitors has also suffered. The South African government's own data shows that since 2000, real after-inflation wages in South Africa have risen 53 percent, while productivity fell by 41 percent.

© 2020 Thomson/Reuters. All rights reserved.

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South African gold producers are preparing for bruising strikes that could start as early as Sunday, with some companies planning for stoppages of up to three months in a high-stakes fight between capital and labor in Africa's biggest economy.
South Africa,Gold Producers,Strikes,Mineworkers
Wednesday, 28 August 2013 12:31 PM
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