Data provided by McGregor BFA
All data is delayed
Loading...
See More

Looming strike to push gold higher

Jul 14 2011 08:10 Reuters

Related Articles

Fight over Cape finances gets dirty

Fuel strike bites as new union joins in

Strike looms as gold sector talks fail

Solidarity to join fuel strike

No fuel at 19 Engen stations

Fuel strike not expected to halt airshow

 
Johannesburg - Strikes are looming in South Africa's gold and platinum sectors which could threaten global supplies at a time when commodity prices are red hot.

Africa's largest economy is also grappling with spreading strikes in its petroleum sector which could have an impact on refinery production and domestic fuel supplies.

South Africa's powerful National Union of Mineworkers (NUM) said on Wednesday wage talks with the country's main gold miners were deadlocked and it was preparing for a strike.

That did not stop South African gold mining shares from surging ahead as bullion scaled record peaks on Wednesday.

"We have deadlocked and will go to mediation but this is paving the way for industrial action in the gold sector," NUM spokesperson Lesiba Seshoka told Reuters.

Mediation is a legal step that needs to be taken in South Africa before unions strike but the two sides are far apart.

Wage settlements, which have averaged about double the inflation rate over the past several years, threaten the economy by driving up the cost of a labour force that is more expensive than in other emerging market rivals such as China and Vietnam, and far less efficient.

Labour is a governing partner with the ruling African National Congress, which typically sides with labour to avoid antagonising an ally that supplies it with large blocks of votes.

The country's chamber of mines, which is negotiating on behalf of the gold mines, said AngloGold Ashanti [JSE:ANG] and Gold Fields [JSE:GFI] were offering between 5% and 5.5% while Harmony Gold Mining Company [JSE:HAR] and junior minor Rand Uranium had put 4.8% to 5.3% on the table.

NUM has been seeking 14%, around triple the current inflation rate and in keeping with demands from other miners and in other sectors.

Miners say they can ill-afford such increases despite sky-high prices as they grapple with other cost pressures. But unions argue that headline inflation does not capture the full impact of rising food and fuel prices on the incomes of its rank-and-file.

Unions also scent fat profits as spot gold on Wednesday hit record highs above $1 580 an ounce and disruptions to production in South Africa could push prices higher.

South African gold mine share prices brushed aside the threat of strike action and soared on the bullion price, which was lifted as investors fled the euro crisis for safe havens, with Harmony leading the way as it added almost eight percent to 97.66 rand.

South African mining shares are seen as relatively cheap because of strained labour relations and talk of nationalisation by radical elements in the ruling African National Congress.

Strikes also threaten South Africa's platinum and coal sectors. In the case of platinum this could hit Anglo Platinum [JSE:AMS] and Impala Platinum Holdings [JSE:IMP] which between them are responsible for two-thirds of global production.

NUM and Amplats are meeting later this month but a resolution looks unlikely with the union looking for a 20% wage increase.

But NUM said on Wednesday it was heading for a strike with Impala. 
NEXT ON FIN24X

DRDGold appoints director

2014-04-17 15:05

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Add your comment
Comment 0 characters remaining
 

Company Snapshot

We're Talking About: Small Business

Standard Bank is looking for 12 entrepreneurs to participate in a 10-part TV series. They could win a R1m investment into their dream.
 
 

'Zuma's legacy will be judged by Nkandla'

The legacy of President Jacob Zuma is contingent on how he deals with the issue of upgrades to his Nkandla homestead, says Cape Town Archbishop Thabo Makgoba.

 
 

Latest elections multimedia

Why Jack Parow wants you to vote on 7 May
The ad the SABC doesn't want to air
Elections 2014 in one cartoon
This year's election posters

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...
Loading...