De Beers Agrees to 9% Pay Raise to Avoid Strike

De Beers will raise pay 9 percent in South Africa to prevent a strike that was scheduled to start later today after the National Union of Mineworkers reached an agreement with the world’s biggest diamond producer.

“They could not afford a strike but neither could the NUM,” Peter Bailey, chief negotiator for the union, said in a phone interview. “A strike is always the last resort.”

Strikes were planned at the Voorspoed operation in Free State province, Kimberley in Northern Cape province, Venetia in Limpopo province, and the company’s trading arm, Diamond Trading Co., the NUM said in an earlier statement.

“We’re pleased that we have an agreement,” Wayne Smerdon, head of employee relations at De Beers, said in a phone interview.

Labor relations across the South African mining industry are tense as companies and unions square up in pay talks at a time of weaker commodity demand and soaring costs. The NUM gave notification to strike on July 3 after meeting with De Beers representatives.

De Beers, a unit of London-based Anglo American Plc (AAL), and the NUM agreed to the “across-the-board” pay raise and two extra days of leave, Bailey said. The annual inflation rate in South Africa was 5.6 percent in May. Talks previously had been at a standstill, with the NUM seeking 13 percent and the company offering 6 percent, according to the union.

De Beers’s South African mines contribute about 16 percent of the company’s total carats recovered, with other operations based in Botswana, Canada and Namibia. De Beers Consolidated Mines has 2,550 staff with 1,300 represented by the NUM, Tom Tweedy, a company spokesman, said yesterday in an e-mail.

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

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

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