S. Africa Mining Peace Deal Won’t Halt Unrest, Eurasia Says

South African mining companies’ peace accord with unions yesterday is unlikely to prevent strikes that have led to stalled output, mass firings and deadly violence in recent months, said analysts at Eurasia Group and Peel Hunt LLP.

The government-led deal, including commitments by workers to keep industrial action within the law, wasn’t signed by the Association of Mineworkers and Construction Union, the biggest labor group at the three largest platinum mines. The AMCU is battling for dominance with the National Union of Mineworkers.

“Even if AMCU signs on later, the pact does little to resolve the turf war between rival unions or moderate wage demands, and labor unrest remains likely during upcoming negotiations over recognition and wages,” Mark Rosenberg, an Africa analyst at Eurasia Group, wrote in a report.

The government has stepped up efforts to quell disruption, bringing in Deputy President Kgalema Motlanthe to broker talks, after an earlier agreement led by Mines Minister Susan Shabangu between companies and unions including the AMCU failed to halt the strikes. Three workers also died in violence in May, after Shabangu brokered the previous accord in February and March.

The “government will act decisively to enforce the rule of law, maintain peace during strikes and other protests relating to labor disputes, ensure protection of life, property and the advancement of the rights of all,” the administration said yesterday in a statement handed to reporters in Pretoria.

Consult Members

The unions that signed the accord agreed to avoid wildcat strikes and respect property rights, while companies said they would deal impartially with their workers’ representatives.

The AMCU said it will consult with members before signing.

“We’ll be able to make a decision after we meet with our members,” AMCU Treasurer Jimmy Gama said today by phone.

“They have nothing against the framework,” Motlanthe told reporters. “It is theirs as much as it is ours. They had no preconditions. Investors are not interested in this document, they’re interested in a stable mining industry.”

The AMCU raised objections on the dismissal of about 1,000 of its members at Glencore Xstrata Plc’s chrome mines, and job losses at the Vaal River operations of AngloGold Ashanti Ltd. this year, said Lesiba Seshoka, a spokesman for the rival NUM who attended the talks between the unions and mining companies.

Disputes have flared as unions seek a more than doubling of some workers’ wages at the same time that falling precious-metal prices and higher energy costs have squeezed producers’ margins.

Strikes Probable

“There’s a high probability we’re going to see strikes across the mining sector simply because the guys want money and the operators can’t afford to give it,” said Maurice Mason, a London-based mining analyst at Peel Hunt LLP.

More than half of gold and platinum operations are losing money, according Bheki Sibiya, chief executive officer of the Chamber of Mines, which represents companies in the industry.

“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,” he said July 2 in the Business Day daily.

The rand appreciated 0.7 percent 10.0225 by 4:47 p.m. in Johannesburg, paring its decline this year to 15 percent, the biggest among the 16 major currencies tracked by Bloomberg.

(Updates with union comment in seventh paragraph.)
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