Tags: gold | platinum | killed | strikes

South Africa Gold Wage Hikes to Add $150 Million in Costs

Wednesday, 11 Sep 2013 12:18 PM

 

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Wage settlements in South Africa's gold sector will amount to 1.5 billion rand ($150 million) in extra costs for companies over the next 12 months, the country's Chamber of Mines said.

Companies and unions agreed to wage hikes of up to 8 percent last week, ending a three-day strike in an industry that has produced a third of the bullion ever pulled from the earth but is now in almost terminal decline.

Separately, the National Association of Automobile Manufacturers of South Africa said its members lost $2 billion in revenue to a four-week strike that ended over the weekend, hammering home the mounting cost of industrial action to Africa's largest economy.

The combined wage bill last year of the main gold producers was 22 billion rand. The workforce has since been trimmed and so the percentage increase of the settlement to the companies' payroll costs cannot be calculated with certainty, though it is probably close to 7.5 percent.

South Africa's gold producers are struggling with rising costs and depressed prices, and said they could not afford to pay out much more without slashing jobs and cutting shafts.

Inflation is 6.3 percent and so the National Union of Mineworkers, which represents about two-thirds of the country's gold miners, can say it delivered above-inflation pay hikes for its members, following a pattern of recent years.

But the agreements fall far short of the 15 to 60 percent pay increases it had been seeking.

Hardline union AMCU, which represents almost 20 percent of the gold workforce, has not signed up and has said its members have given it a mandate to strike though it has not called one.

But Elize Strydom, the chamber's chief negotiator, said that since most of the workforce had signed legally binding agreements, companies can apply the wage settlement unilaterally to all workers.

Therefore from the chamber's perspective, any strike would be considered "unprotected" or wildcat, and workers taking part could be fired.

"We have a wage agreement. There will be no further negotiations about wages," Strydom told a news briefing.

AMCU officials could not be reached immediately for comment but the union will meet on Friday with the chamber, which negotiates on behalf of the country's main gold producers including AngloGold Ashanti, Gold Fields and Harmony Gold.

AMCU'S NEXT MOVES

The industry is carefully watching AMCU's next moves as the union and its members are widely regarded as unpredictable.

AMCU exploded onto South Africa's labor scene last year when it poached tens of thousands of gold and platinum miners from NUM in a bloody union turf war that killed dozens of people, sparked a wave of wildcat strikes and led to sovereign credit downgrades.

But AMCU has been a far more disciplined force this year and has generally been following the rules of the game, a sharp contrast to last year when its members marched by their thousands brandishing spears, clubs and knives.

Markets are also turning their attention to talks in the platinum sector with the world's top producers Anglo American Platinum, Impala Platinum and Lonmin. AMCU is now the dominant union in the industry.

The speedy resolution to the gold dispute has raised hopes that a potentially far more serious strike can be averted in South Africa's platinum sector, which produces about 75 percent of global supplies of the precious metal used for emissions-capping converters in cars.

© 2014 Thomson/Reuters. All rights reserved.

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