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Cape Town - A month-long strike action at AngloGold Ashanti's South African mines would have cost the company around $50m (about R679m) of earnings before interest, taxes, depreciation, and amortization (Ebitda), according to Douglas Rowlings, an analyst at ratings agency Moody's.
Moody’s said on Monday it views the successfully negotiated three-year wage deal between AngloGold Ashanti [JSE:ANG] and its employees in South Africa as a win-win for both the company and its miners in ensuring job security in an economically advantageous and sustainable manner for both sides.
“The wage agreement avoids strike action at AGA’s South African mines. Under our calculation a month-long strike action at AGA’s South African mines would have cost it around $50m of EBITDA, which is almost equivalent to the additional amount it will incur for the agreed increase on its entire 2016 wage bill,” said Moody's.
“With this agreement many jobs and marginal mine shafts will be saved in a sector that is already under pressure from electricity tariff increases and a low gold price of around $1136.80 per ounce.”
Entry-level workers at AngloGold Ashanti will get wage increases of up to 13%, according to an agreement reached with unions last week.
The National Union of Mineworkers (NUM), Solidarity and the United Association of South Africa (Uasa), signed the three-year agreement with the two companies.
The Association of Mineworkers and Construction Union (Amcu), however, rejected the companies' offers. It declared disputes with AngloGold, Harmony [JSE:HAR]and Sibanye Gold [JSE:SGB].
(Amcu) will decide on whether to strike at operations of gold companies at a mass meeting on Sunday, a spokesperson said on Monday.
