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South African Union Divisions Soften Gold-Strike Blow

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Sept. 5 (Bloomberg) -- Production at South Africa’s biggest gold mines is so far weathering the industry’s third strike in as many years as union divisions lead to more strident demands.

AngloGold Ashanti Ltd.’s Mponeng, Harmony Gold Mining Co.’s Kusasalethu and Sibanye Gold Ltd.’s Driefontein sites are operating normally today, the Chamber of Mines, which represents companies in negotiations, said on its website. This is because the Association of Metalworkers and Construction Union held back from joining a strike initiated by the National Union of Mineworkers on Sept. 3.

The AMCU, representing a majority of employees at the three mines, is seeking to gain workers’ support and usurp the NUM’s position as the dominant labor group in the industry, partly by outpacing its demands for better pay. The NUM still represents about two-thirds of the nation’s 107,000 gold miners.

For mine operators, “the advantage is labor is divided,” Mark Rosenberg, an Africa analyst at New York-based Eurasia Group, said by phone. “The rise of AMCU is undermining the traditional sector-wide collective bargaining in gold.”

Three of AngloGold’s six South African mines have also run normally since the onset of the strike. During the 2011 stoppage, none of its mines operated.

AMCU Meeting

The AMCU, founded by expelled NUM member Joseph Mathunjwa, represents 73 percent of workers at Kusasalethu, 65 percent at Driefontein and the majority at Mponeng. The union will meet with members on Sept. 7 to decide on possible strike action, AMCU Treasurer Jimmy Gama said by phone today.

“AMCU is playing cat and mouse with the chamber and NUM,” said David Davis, a Johannesburg-based analyst at SBG Securities Ltd. “If there’s any agreement with NUM, then AMCU may well go on strike.”

The NUM is asking for a 60 percent pay increase to 8,000 rand ($783) a month for entry-level gold miners, while the AMCU is seeking 12,500 rand. The demands jar with the Chamber of Mines’ offer on Aug. 29 of a 6 percent to 6.5 percent gain.

While splits between rival unions over demands may have helped keep mines open, it also complicates wage negotiations. The NUM received a fresh offer from employers yesterday, union spokesman Lesiba Seshoka said by phone. The AMCU has not been given an updated offer, Gama said.

“It’s difficult to get business done as efficiently as possible,” Rosenberg said. “There are multiple players and then the intra-union rivalry is probably driving militancy.”

Two Settlements

Pan African Resources Plc said it 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. Village Main Reef Ltd. agreed to gains of 7.5 percent to 8 percent with the NUM for about 2,550 workers at its Tau Lekoa mine, it said.

Still, the chamber maintains that a 27 percent drop in gold since a peak of $1,900 an ounce in 2011 makes it hard to offer raises at above South Africa’s 6.3 percent inflation rate.

While Harmony’s Kusasalethu remains open, output at nine other mines is affected by the dispute. At Sibanye, output at both Kloof and Beatrix has been curbed, the chamber said.

“It could be a prolonged strike,” Davis said. “I don’t think the mining companies are going to budge.”

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

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

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