Bloodshed seen if pay strike called at SA gold mines

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

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

“I think there will be a strike,” most likely led by the Association of Mineworkers and Construction Union (Amcu), which speaks for about 30% 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 operations 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’s [JSE:LON] Marikana platinum operations in 2012.

The National Union of Mineworkers (NUM) represents 52% of the 95 000 employees at companies the chamber speaks for, including Sibanye Gold [JSE:SGL] and Harmony Gold Mining [JSE:HAR]. Both unions 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.

Too early

It’s too early to tell if there will be a walkout, Rene Hochreiter, a Johannesburg-based analyst at Noah Capital Markets, said in an e-mailed response to questions. South Africa’s gold industry “cannot afford a strike - the mines will close down,” he said. “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.

While the NUM has remained in the talks and has many incentives to settle, there is the possibility that its members could strike as well, Levy said.