South African Mining Strikes Wane as Gold Workers Return

Harmony Gold Mining Co. (HAR) said workers reported for duty to avoid losing their jobs as South African strikes that started two months ago waned in the face of ultimatums from producers to more than 25,000 workers.

Of 5,400 employees who walked out, 98 percent returned to Johannesburg-based Harmony’s Kusasalethu mine, meeting a 6 a.m. deadline, the company said in a statement.

A wave of wildcat pay strikes has cut mining output in Africa’s largest economy, leading some producers to dismiss employees refusing to return. AngloGold Ashanti Ltd. (ANG) said it remains in talks with 12,000 workers it fired, while Gold Fields Ltd. (GFI) said most of the 8,100 workers it dismissed have appealed to keep their jobs. The walkouts are now easing, said Leon Esterhuizen, a metals analyst at CIBC World Markets Inc.

“By all accounts, they seem to be done,” Esterhuizen said by phone from London. Harmony gained 1.1 percent to 71.43 rand by 4:16 p.m. in Johannesburg. AngloGold was down 0.6 percent at 283.99 rand, and Gold Fields dropped 0.3 percent to 104.87 rand.

Gold Fields has received appeals from 7,300 of those fired at its KDC East operation on Oct. 23, Sven Lunsche, a company spokesman, said by e-mail. AngloGold resumed talks with dismissed workers today and saw “indications that employees intend to return,” Alan Fine, a spokesman, said by telephone.

AngloGold, Africa’s biggest producer of the metal, restarted three mines at its Vaal River complex in the past two days as strikes ended, after shutting all its South African sites last month because of the walkouts.

Forecast Cut

Strikes that began at platinum mines and spread to gold, chrome, coal and iron ore have hurt operators already grappling with rising costs. Anglo American Platinum Ltd. (AMS), the world’s largest producer of the metal, today lowered its full-year output forecast, citing the impact of the stoppages.

The walkouts have cut South Africa’s mining production by 10.1 billion rand ($1.16 billion) this year, curbing tax revenue, exports and jobs, the National Treasury said in its mid-term budget, released in Cape Town today. Mine output fell 3.3 percent in the year through August, with production of platinum group metals slumping 15 percent from a year earlier.

The effect of the strikes on mining production is equivalent to about 0.3 percent of gross domestic product.

AngloGold Volumes

AngloGold’s third-quarter output was 1.03 million ounces, missing a forecast of 1.07 million to 1.10 million ounces, in part because of the walkouts in South Africa, the Johannesburg- based company said yesterday.

Even after workers return, production will take time to recover, David Davis, an SBG Securities Ltd. gold analyst in Johannesburg, said in a phone interview.

“Before any of the miners go down again there would need to be comprehensive safety briefings and checks,” Davis said. “That could take a significant amount of time. The next step of course is next year’s wage negotiations and how that’s going to be approached.”

Gold producers represented by the Chamber of Mines signed an agreement with labor unions over changes to pay and job categories today.

Members have “overwhelmingly” accepted the offer, which, when added to a two-year deal, will see wages increase by as much as 20.8 percent, Lesiba Seshoka, a spokesman for the National Union of Mineworkers, said by phone as the accord was signed in Johannesburg.

Pay Agreement

The companies already agreed last year to raise salaries by 7.5 percent to 10 percent for 2012. South Africa’s annual inflation rate was 5.5 percent in September.

The agreement will see workers getting increases of 3 percent to 11 percent on top of those contained in the two-year wage accord, Seshoka said. The deal also moves entry-level workers to a higher pay category and includes allowances for rock drillers and other underground operators.

“By the end of this week we are expecting that everyone else would have returned in the gold sector,” Seshoka said.

To contact the reporter on this story: Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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