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Johannesburg - Six weeks of wage talks between South African gold producers and unions have failed to bridge the chasm between their positions, increasing the prospect of crippling strikes in a declining industry battling low prices and soaring costs.
Gold mine stoppages would inflict more damage on the economy, which is already losing $60m a day to a strike by 30 000 workers in the car manufacturing sector that accounts for 6% of gross domestic product.
The auto strike entered its third day on Wednesday and has affected global carmakers operating in South Africa, including Toyota, Ford and General Motors.
The two opposing sides in the gold sector remain poles apart after the weeks of talks, with virtually no narrowing of the gap between employers, whose latest offer was a 5.5% hike for basic wages, and unions.
The National Union of Mineworkers (NUM), which represents 64% of the country's roughly 140 000 gold miners, is seeking a basic wage for entry-level underground workers of R8 000 ($790) a month, a 60% increase.
The Association of Mineworkers and Construction Union (AMCU), with about 17% of the gold labour force, has submitted demands as high as 150%.
"The prospects for a strike remain big," NUM spokesperson Lesiba Seshoka told Reuters. More talks were due on Wednesday and Monday and workers could down tools after that if the impasse remained.
In contrast, negotiators in the auto sector made some movement towards bringing their positions closer. The National Union of Metalworkers of South Africa has reduced its 20% raise demand to 14%, compared to the 8% being offered by the companies for the first year.
South Africa's gold and platinum producers are still recovering from a wave of wildcat strikes in 2012 rooted in a turf war between NUM and AMCU. This cost billions of dollars in lost output and triggered damaging sovereign credit downgrades.
But in contrast with last year, when illegal strikes spun out of control into violence, the wage talks process this year has followed standard legal procedures and has been generally peaceful, although there have been sporadic murders at mines.
No compromise
The gold companies, which have slightly raised their starting offers, say the unions have shown no compromise.
"If you look at past years there has been a narrowing of the gap by this stage in the negotiations and we have not seen that yet," said Charmane Russell, a spokesperson for the gold producers which include AngloGold Ashanti, Gold Fields, Harmony and Sibanye Gold.
Aside from a 5.5% increase, producers have also offered a "gain share" which, depending on the company, could be linked to the gold price, production, profits or cost objectives and could add another 1% to a basic wage.
Inflation data released on Wednesday will do little to cool union demands as it showed headline inflation in South Africa accelerated to 6.3% in July from 5.5% in June.
Worryingly, food inflation rose by 6.8%, a trend which eats into the income of working-class households.
The chasm between the two sides underlines growing militancy among a black labour force that has seen few improvements in living conditions in the two decades since apartheid ended.
But companies have little room, with labour accounting for over 50% of costs and gold's spot price about 30% lower than the record peak of over $1 920 an ounce it reached almost two years ago. About half of the country's shafts are losing money at these levels, the industry says.
This spells big trouble for a South African sector that accounted for 79% of world gold production in 1970.
Thomson Reuters GFMS ranked South Africa sixth in global output in 2012, when it produced 177.8 tonnes of gold, just 6% of the world total. It was the country's worst year for bullion production since 1905.
The outlook is gloomy too for talks in the platinum sector, which also faces massive union pay hike demands just as it grapples with rising costs and depressed prices.
