Strikes halt Mondi, Sappi mills

Johannesburg - The mills of paper and pulp producers Sappi and Mondi are coming to a standstill because of striking employees.

"After a slow start on Monday, the strike had spread to all our mills by the evening," said André Oberholzer, group head of corporate affairs at Sappi. "Unionised staff seem to be heeding the call by their union, although not to the same extent at all mills."

Oberholzer admitted Sappi's production has been curtailed, but it is too early to estimate what effect the strike will have.

Sappi, Mondi and unions met on Monday in a bid to settle the dispute. The parties failed to come to an agreement, after which unionised employees began to strike. Earlier, employers upped their wage increase offer from 4.5% to 7%, with the unions responding by lowering theirs from 17% to 12%.

Another meeting between employers and unions is scheduled for Thursday.

The strikes have had a negligible effect on the companies' share prices. On Thursday morning, Sappi was trading up 2.27%% to 2 250c per share, while JSE-listed Mondi Limited and London-listed Mondi Plc were trading up 1.36% to 3 132c/share and 0.67% to 2 990c/share respectively.

Two weeks ago, Mondi Limited was trading at a premium of around 28% to the London listing. However, by Thursday the gap narrowed to 4.1%. The trade differential was a result of Mondi's dual-listing structure in Johannesburg and London.

SA investors were not allowed to invest in Mondi Plc without using their offshore assets quota. However, the SA Reserve Bank reclassified the Plc listing as a domestic asset on Wednesday, which helped to eliminate the differential.

- Fin24.com