South African Unions Declare Deadlock in Gold Mining Wage Talks

South African unions representing gold-mine workers have declared a deadlock in wage negotiations after producers raised a wage offer by one percentage point.

The dispute will now go to arbitration, Solidarity General Secretary Gideon du Plessis said in an e-mailed statement. The Chamber of Mines, representing producers, said mediation at the country’s Commission for Conciliation, Mediation and Arbitration will last about 30 days.

“It doesn’t rule out a strike as soon as possible,” Lesiba Seshoka, a spokesman for the National Union of Mineworkers, said by phone. The union represents 64 percent of employees in the industry.

The chamber, representing companies including AngloGold Ashanti Ltd., the world’s third-largest producer, offered 5 percent increases in wages and housing-related allowances, it said in a statement today. Unions rejected a 4 percent increase tabled last week.

About 60 percent of gold-mining operations in South Africa, the sixth-biggest producer, are unprofitable, the chamber said July 15. Gold has dropped 30 percent from an intraday high of $1,921.17 an ounce in September 2011, including a record three-month decline in the second quarter.

The producer group said its revised offer will raise entry-level pay for underground workers to 9,000 rand ($934) a month, including some benefits. The NUM wants base pay, excluding benefits, for the same employees to be raised 61 percent to 8,000 rand.

Gold Shares

Gold stocks pared gains in Johannesburg after the deadlock announcement. AngloGold, which had increased as much as 4.1 percent, traded 1.4 percent higher at 140.53 rand by 2:37 p.m. in Johannesburg. Harmony Gold Mining Co. rose 0.8 percent to 38.38 rand, compared with an intraday advance of as much as 2.8 percent.

The Association of Mineworkers and Construction Union has requested additional information from the producers, the chamber said. The NUM, Solidarity and UASA have declared the dispute.

“We’re in a situation where we cannot move forward,” Franz Stehring, head of mining for UASA, said by phone.

Wage negotiations in the gold industry will only gain momentum once a process of facilitation is followed, according to Solidarity’s Du Plessis. The union “has urged the executives of the employers in the gold sector to put their negotiators in a better bargaining position so that an agreement could be reached,” he said.

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