Sibanye Gold Reaches 3-Year Wage Agreement With Most Unions

Updated on
  • Company drops condition that all labor groups had to agree
  • Includes increases of 12% in year one for entry-level workers

Sibanye Gold Ltd., the largest producer of South African bullion, reached a three-year pay deal Wednesday with three of the four unions at its operations after dropping a condition that all of the labor groups unanimously agree on it.

The accord with the National Union of Mineworkers, the biggest labor group at the company, UASA and Solidarity includes pay increases of as much as 12 percent in the first year for entry-level employees, the Chamber of Mines said. The Association of Mineworkers and Construction Union, or AMCU, didn’t accept the terms. South Africa’s inflation rate was 4.6 percent in September.

“Sibanye had indicated that it wanted to sign an agreement with all four unions in the interest of labor stability and the sustainability of the industry," Elize Strydom, chief negotiator for the Chamber of Mines, said in an e-mailed statement late Wednesday. "It became clear that this was not possible" even after the talks were extended, she said.

The three unions signed a three-year agreement on Oct. 2 with AngloGold Ashanti Ltd., the world’s No. 3 producer, and Harmony Gold Mining Co. The AMCU also refused to sign that pact, seeking higher pay for entry-level workers. The companies have sought to avoid a repeat of last year’s five-month strike at platinum mines that crippled output, stifled economic growth and led to job losses.

Gold has fallen 38 percent from a June 2011 peak, and the largest producers in South Africa, whose mines are the deepest and among the oldest in the world, are losing money on about 35 percent of production at current prices.

The deal includes improved medical incapacity provisions, medical-insurance contribution rates and minimum severance pay. The salary and benefits package is backdated to July 1 and runs through June 30, 2018, according to the statement.

All workers, including AMCU members, will receive the wage increase, James Wellsted, a spokesman for Sibanye, said by phone. "It’s not fair on our employees to be held to ransom in this way by AMCU leadership, particularly to those unions who did want to sign."

Union Strategy

"We will be consulting with our members," Manzini Zungu, a spokesman for the AMCU, said by phone.

The union is ready to call a strike at gold operations, its members indicated at a meeting earlier this month. There is no majority union at Sibanye, so labor actions are protected, meaning miners don’t lose their jobs by taking part.

"Our members are excited and they gave us the mandate to sign,” NUM General Secretary David Sipunzi said in a statement.

Sibanye shares gained 3.1 percent to 22.68 rand by 12:45 p.m. in Johannesburg.

Mining accounts for more than half of South Africa’s exports and employs about 446,000 people. The commodity-price slump and power cuts earlier in the year spurred some mining companies to scale back output and try to reduce expenditures.