South Africa Mine Wage Talks Open With Highest Demands on Record

South African gold producers and unions opened wage talks today, with labor groups set to table the largest-ever pay demands weeks after the precious metal’s steepest quarterly price slump on record.

Completing a protocol on how the process is conducted is the first item on the talks agenda, Charmane Russell, a spokeswoman for the Chamber of Mines, which represents the producers, said in an e-mailed response to questions. Unions are then due to explain their positions on pay and answer questions from employers, she said.

The National Union of Mineworkers, which represents more gold miners than any other, is asking for increases of as much as 60 percent. The Association of Mineworkers and Construction Union is seeking to double the basic pay for underground workers. The wage requests are unprecedented, said Russell, and follow a 23 percent drop in gold prices in the first quarter.

“I’m confident that we’ll be able to reach a settlement that is acceptable to all parties,” Mines Minister Susan Shabangu told reporters yesterday. “As a former trade unionist, it doesn’t mean that when you start with 60 percent you’ll end up with 60 percent. It never happens.”

AngloGold Ashanti Ltd. (ANG), the world’s third-biggest producer, Gold Fields Ltd. (GFI), Harmony Gold Mining Ltd. (HAR) and Sibanye Gold Ltd. (SGL) are among companies that belong to the chamber.

Union rivalry has fueled wage demands, Eugene King, an analyst at Goldman Sachs Inc., wrote in a July 5 note to clients.

Acid Test

“Worsening economics have put extra pressure on the miners to achieve a better outcome for their shareholders, but for the Association of Mineworkers and Construction Union and NUM, this will be an acid test and hence both are demanding double-digit pay rises,” King wrote.

The AMCU, representing about 17 percent of workers, is the biggest in the nation’s gold industry after the NUM, which speaks on behalf of 64 percent of gold miners, according to the chamber

The UASA and Solidarity unions, representing workers in higher-skilled categories, have proposed wage increases of 18 percent and 14 percent, respectively.

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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