Bloodshed Seen If Strike Called at South African Gold Mines

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A pay strike at South African gold companies could result in more violence at the mines, said Andrew Levy, a labor-relations consultant.

The Chamber of Mines, a lobby group representing companies including world No. 3 producer AngloGold Ashanti Ltd., and the four unions representing workers are “far apart” in wage talks, it said July 16. The labor groups are seeking an increase of at least 80 percent in entry-level pay and producers are offering 13 percent at most.

“I think there will be a strike,” most likely led by the Association of Mineworkers and Construction Union, which speaks for about 30 percent of the employees, Levy said. If operations continue with AMCU on strike, “there will be bodies and there will be bloodshed,” he said.

South African gold producers are looking to avoid a repeat of a strike that crippled platinum companies in the country last year, halting most local mines of the world’s three-biggest operators for five months. They also want to avert violence that resulted in at least 44 deaths around Lonmin Plc’s Marikana platinum assets in 2012.

The National Union of Mineworkers represents 52 percent of the 95,000 employees at companies the chamber speaks for, including Sibanye Gold Ltd. and Harmony Gold Mining Co. Both the NUM and the AMCU have lost members to violence at platinum mines, where the AMCU has displaced the NUM as the biggest representative of miners. Sibanye briefly shut operations at Beatrix shafts in February after fighting between the groups.

Strike ‘Premature’

Talk of a strike is “very premature” according to Manzini Zungu, a spokesman for the AMCU. Wage negotiations “are still ongoing” and the union had a positive meeting with companies on Monday. There are no plans to move to a government backed dispute-resolution process yet, he said.

“Our organization does not participate in any violence,” he said by phone. “We do not operate in that space. We do not encourage violence. It’s our job to settle differences through negotiations with the various parties involved.”

South Africa’s gold industry “cannot afford a strike -- the mines will close down,” Rene Hochreiter, a Johannesburg-based analyst at Noah Capital Markets Pty Ltd., said in an e-mailed response to questions. “Initial signs are that management and unions are talking.”

The pay talks started on June 22. The AMCU is in separate discussions with the chamber after walking out of the collective negotiations on July 8.