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Gold Producers, Union Closer to Agreement in South Africa

South Africa’s largest gold producers are closer to a wage agreement with the union that called almost two-thirds of the industry’s 107,000 workers out on strike overnight, a spokeswoman for the companies said.

“While no formal revised demand has been tabled, positive discussions have been held,” Charmane Russell, a spokeswoman for the Chamber of Mines at Russell & Associates, said in a text message. “These discussions will continue today.” Two smaller gold mines said today they had settled pay talks.

National Union of Mineworkers members began a strike at the start of yesterday’s evening shift after the chamber failed to meet the NUM’s wage demands. The body represents seven companies in talks, including AngloGold Ashanti Ltd, Sibanye Gold Ltd and Gold Fields Ltd. The group on Aug. 29 made a final offer to raise pay by 6 percent to 6.5 percent. The NUM wants as much as a 60 percent increase in employees’ starting salaries of 5,000 rand ($490) a month.

There are no productive shifts at two AngloGold Ashanti mines today because of the strike, the chamber said on its website. Less than 20 percent of workers reported for duty at at least 11 other mines, eight of which are operated by Harmony Gold Mining Co., the chamber said.

Mines where the Association of Mineworkers and Construction Union has the biggest membership have normal attendance today, the chamber said. The AMCU is the largest union at AngloGold Ashanti’s Mponeng, Harmony Gold’s Kusasalethu and Sibanye Gold’s Driefontein sites. The three mines are the biggest South African operations of the respective companies.

‘Reasonable’ Outcome

Pan African Resources Plc reached an agreement with the NUM and the UASA union to increase wages for about 2,500 workers by about 8 percent at its Evander mines, the company said in a statement today. Village Main Reef Ltd. agreed increases of between 7.5 percent and 8 percent with the NUM for about 2,550 workers at its Tau Lekoa mine, the company said.

A minimum entry-level wage of 5,500 rand would be “reasonable,” the North West province branch of the Congress of South African Trade Unions, of which the NUM is a member, said in an e-mailed statement today. Such a settlement would represent a 10 percent increase. The NUM has demanded a jump to 8,000 rand.

The union will consider any higher wage increase offer by the producers, NUM spokesman Lesiba Seshoka said by phone. “If the chamber is prepared to negotiate, we may be prepared to go down,” he said.

Increase Agreement

A strike may cost the South African gold industry about 349 million rand a day in revenue, with the total cost including lost wages and taxes reaching 597 million rand a day, the chamber says. Workers in the automotive, construction and aviation industries have already gone on strike to demand pay gains in excess of the inflation rate of 6.3 percent in July.

The AMCU, the second-biggest labor group representing gold miners, is seeking an increase to 12,500 rand a month, and Solidarity wants an 8.3 percent gain. UASA, a group that represents almost 7 percent of gold miners, is the only union that has said it’s ready to accept the employers’ offer.

Solidarity, representing more than 2 percent of employees, won’t do the work of any striking NUM members or participate in essential services, during the biggest union’s action, General Secretary Gideon du Plessis said in an Aug. 30 interview.

The AMCU, whose members make up about 17 percent of workers in the gold industry, is in talks with them over what action to take, President Joseph Mathunjwa said in a phone interview. “A strike, to AMCU, is the last resort,” Mathunjwa said.

Four Days

South Africa’s last industrywide gold mining strike over pay, in 2011, lasted four days. The stoppage ended after producers agreed to boost pay by 7.5 percent to 10 percent in each of two years.

The FTSE/JSE Africa Gold Mining Index is down 43 percent in 2013. The spot price for gold declined 1.4 percent to $1,392.90 by 3:58 p.m. in Johannesburg, paring its advance since June 27, when the metal reached its low for the year, to 16 percent.

Talks on wages in the South African coal industry will continue on Sept. 6 after unions and the chamber met with the Commission for Conciliation, Mediation and Arbitration today, Solidarity’s Du Plessis said by phone.

Negotiations became deadlocked on Aug. 12 after unions rejected a wage increase offer of 7 percent to 7.5 percent, Du Plessis said. Among South African mining industries, coal is the least at risk of strikes, with a 50 percent chance of disruption, compared with 60 percent in the platinum business, Mark Rosenberg, an Africa analyst at Eurasia Group, said in an Aug. 28 report.

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