South African Mine Industry at Stake in Wage Talks, Chamber SaysKevin Crowley
South African mining companies and trade unions risk destroying the country’s biggest export industry and threatening its credit rating should wage talks fail, according to the Chamber of Mines.
“Failure is not an option as this will accelerate the creeping destruction of one of South Africa’s most important industries and inhibit the investment support that the country so urgently needs,” Bheki Sibiya, the Chamber’s chief executive officer, wrote in the Johannesburg-based Business Day newspaper.
Falling precious-metal prices and higher costs have squeezed South Africa’s gold and platinum producers, who are facing demands from labor unions to as much as double wages for entry-level workers. A year ago, strikes spilled over into violence that led to the deaths of 44 people and shaved 0.5 percentage points off economic growth.
Gold dropped 23 percent in the second quarter, the biggest three-month slump on record, while platinum is down 11 percent this year. More than half of South Africa’s gold and platinum operations are “in loss-making positions,” Sibiya said.
Sibiya, whose Chamber of Mines represents mining companies, said he hoped unions will participate in pre-negotiation talks on July 8 that will determine the rules for wage discussions due to start three days later.
“Neither the industry nor the country can afford yet another wave of calamitous workplace disorder that delivers additional global uncertainty and become the cause of further downgrades of South Africa’s sovereign credit rating,” he said.
AngloGold Ashanti Ltd., the world’s third-biggest producer of the metal, Gold Fields Ltd., Harmony Gold Mining Ltd. and Sibanye Gold Ltd. are among companies that belong to the chamber.
Entry-level underground gold miners receive a minimum wage of 5,000 rand ($506) a month. The National Union of Mineworkers, which represents 64 percent of workers, wants this increased to 8,000 rand while the rival Association of Mineworkers and Construction Union is asking for it to rise to 12,500 rand.
South African miners’ wages can be required to support as many as 10 other people, including family members, according to Richard Hart, a Johannesburg-based analyst at Macquarie First South Securities Ltd.
Standard & Poor’s and Moody’s Investors Service kept South Africa’s rating on a negative outlook after lowering their ratings by one level last year. Fitch Rating lowered the nation’s debt rating to BBB, the second-lowest investment grade, in January.