• Consultant Eurasia sees 55% chance of action at a top producer
  • Any strike may now last 1 to 2 weeks after Monday's pact

A labor strike at one of South Africa’s top gold producers is still more likely than not even after companies, unions and the government signed a pact this week to address job losses, according to consultant Eurasia Group.

There’s a 55 percent chance that workers will strike at at least one of the largest producers, down from odds of 65 percent before the agreement, New York-based Eurasia analysts Mark Rosenberg and Lily Ghebrai wrote in a note Thursday. They said any strike would probably last one to two weeks compared with two to four weeks previously expected.

Workers are demanding better pay while producers have been contending with higher costs as bullion prices trade near a five-year low. The government, mining companies and groups including the National Union of Mineworkers on Monday adopted a 10-point plan to curb as many as 19,000 job losses in the industry. Gold wage negotiations broke down last month and the sides will start a conciliation process on Sept. 14. That may lead to a strike if no resolution is found.

“The pact does reduce the risk of a NUM-led stoppage in gold or coal,” the analysts wrote. Still, it “is a weak agreement that is unlikely to halt coming retrenchments in the sector or resolve structural instability in the labor market,” they said.

Gold Producers

Sibanye Gold Ltd. and AngloGold Ashanti Ltd. are probably more likely to face strikes because of “steeper divisions among unions," Eurasia said. The country’s gold producers can probably withstand an eight-week labor stoppage, according to Barclays Plc.

"We expect arbitration will produce an agreement" in the coal industry, where the NUM has a bigger majority than in gold, Eurasia said. The Association of Mineworkers and Construction Union "has clear incentives to strike" at gold companies, where they represent about 30 percent of employees. The NUM represents about half of gold workers.

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