South African Mining Strikes Cost $1.2 Billion in Lost Output

Strikes in South Africa cut mining production by 10.1 billion rand ($1.15 billion) this year, curbing tax revenue, exports and jobs, the National Treasury said.

The strikes “have dented confidence and lowered growth prospects for the remainder of the year,” the Treasury said in the mid-term budget, released in Cape Town today.

Violent labor unrest in the mining industry intensified this year, starting in January with a stoppage by workers at Impala Platinum Holdings Ltd., the world’s second-largest platinum producer, that left four people dead. At least 46 people died during an illegal six-week strike that began Aug. 10 at Lonmin Plc’s Marikana platinum mine, 34 of them killed by police as they tried to disperse protesters. Labor stoppages have shut shafts owned by AngloGold Ashanti Ltd. and Gold Fields Ltd., prompting the companies to start processes to fire more than 20,000 workers.

“Declining mining output and the spread of strike activity has depressed activity in related industries including manufacturing, logistics and services,” the Treasury said. “The impact will be larger if strike activity is protracted.”

Mining output fell 3.3 percent in the year through August, with production of platinum group metals slumping 15.3 percent from a year earlier, the Treasury said. Lower platinum, gold and coal output was partially offset by increased output of iron ore spurred by strong demand from China, it said.

Growth Forecasts

Africa’s largest economy will probably expand 2.5 percent this year, down from a previous estimate of 2.7 percent, the Treasury said. Growth is set to accelerate to 3 percent in 2013, down from 3.6 percent estimated in February. The reduction in mining production because of the strikes is equivalent to about 0.3 percent of gross domestic product.

The government has made the re-establishment of “orderly labor relations” a priority, according to the Treasury.

President Jacob Zuma ordered a judicial probe, led by retired Supreme Court Judge Ian Farlam, into the police shooting at Marikana on Aug. 16 and the deaths of 10 people, including two policemen, before that. Police used automatic weapons and live ammunition to disperse a crowd of about 3,000 strikers, some of them armed with machetes and sticks.

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