South Africa’s Motlanthe Says Union May Yet Strike Over Gold Pay

South African unions may hold authorized strikes at mines where they are the majority labor group despite agreeing to an industry-wide pay increase, Deputy President Kgalema Motlanthe said.

Gold companies this month reached a wage pact with all labor organizations except for the Association of Mineworkers and Construction Union, which represents 19 percent of miners. A strike by AMCU members would be unauthorized because most have agreed to the deal, the Chamber of Mines, which represents bullion producers, said Sept. 11. AMCU speaks on behalf of the majority of workers at Sibanye Gold Ltd. (SGL), AngloGold Ashanti Ltd. (ANG) and Harmony Gold Mining Co. (HAR)’s biggest sites.

“What would have normally applied across the board can’t apply to them without their consent at that mine because they’re the majority union,” Motlanthe said in an interview in London today, referring to the AMCU. “It would be a legal strike.”

In South Africa, the world’s sixth-biggest producer of the metal, an unauthorized strike is deemed to breach labor rules, leaving workers vulnerable to possible dismissal. The union has called for a wage increase to 12,500 rand ($1,270) a month for entry-level workers. Those employees currently receive 5,400 rand a month following the 8 percent gain agreed to by the National Union of Mineworkers, Solidarity and UASA earlier this month. The NUM represents 63 percent of gold-mining employees.

The AMCU has a “recognition agreement that they are the majority union at that particular mine so they’ve got to negotiate with that mine outside of the chamber,” Motlanthe said.

Majority Representative

The union, founded by expelled NUM member Joseph Mathunjwa, represents 73 percent of workers at Harmony’s Kusasalethu, 65 percent at Sibanye’s Driefontein and the majority at AngloGold’s Mponeng.

The chamber will hold “no further negotiations about wages,” Chief Negotiator Elize Strydom said Sept. 11.

Sibanye on Sept. 12 said it will pay a maiden interim dividend of 0.37 rand a share, having delayed declaration until wage talks had been concluded.

“The labor legislation provides for the agreement to be applied to all union members within the bargaining unit,” Charmane Russell, a spokeswoman for the chamber, said by phone today. “Should a strike notice be received, employers would seek to get an interdict which would make that strike unprotected,” she said, referring to a court order.

The chamber has received legal counsel and is “confident” of its interpretation of the law, she said.

Strong Case

The AMCU has a strong case, said John Brand, a labor lawyer at Johannesburg-based Bowman Gilfillan Inc.

“I don’t think it is possible to make the agreement binding on the industry as a whole,” he said in an e-mailed response to questions. “There’s a stronger argument to say the different locations are separate workplaces.”

The AMCU is the biggest representative of workers at Anglo American Platinum Ltd., Impala Platinum Holdings Ltd. and Lonmin Plc, the world’s three largest producers of the metal.

“We haven’t taken a decision” on a strike, AMCU President Joseph Mathunjwa said by phone. Labor action should be authorized, he said. A strike would be a “last resort,” he said on Sept. 5.

The AMCU’s demand that entry-level workers’ wages be more than doubled compares with an annual inflation rate of 6.3 percent in July.

The union would be authorized to strike, Andrew Levy, who heads is own labor-research company in Johannesburg, said by e-mail today.

AngloGold, the world’s third-biggest producer of the metal, along with Harmony and Gold Fields posted a second-quarter loss as bullion dropped a record 36 percent in that period.

“High wages ought to be a function of high productivity,” Motlanthe said. “What’s the point of killing the goose that lays the golden egg, so to speak. You wouldn’t want to smother these companies out of existence, it defeats the purpose. We don’t see it as a sunset industry, we think there is a future for gold mining.”

To contact the reporters on this story: Kevin Crowley in Johannesburg at kcrowley1@bloomberg.net; Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net; Chris Kay in London at ckay5@bloomberg.net

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

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