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Strike fears as NUM seeks 60% pay hikes

Johannesburg - The prospect of fresh strikes in South Africa's already embattled mining sector resurfaced on Sunday after representatives of the National Union of Mineworkers (NUM) said it would seek pay rises of up to 60% from gold and coal producers.

This comes as mining companies battle higher costs and falling prices in an already heated labour climate, and as the country is hoping to avoid the 2012 wildcat strike action at platinum and gold mines that claimed the lives of 50 people and cost the industry and economy billions in lost revenue and production.

Mineworkers are mobilising to assert themselves, with the NUM fighting a challenge to its once near monopoly in the shafts from the Association of Mineworkers and Construction Union (Amcu), which has poached tens of thousands of platinum miners from it in a violent struggle for members.

NUM said it was seeking an entry-level minimum monthly wage of R7 000 for gold and coal surface workers and R8 000 for those underground in a submission to the Chamber of Mines.

Elize Strydom, the industrial relations advisor at the Chamber of Mines, said the minimum wage for surface workers was currently R4 700 and for underground miners it was about R5 000, so the demands for the latter were 60%.

NUM also said it wanted 15% increases for "all other wage categories", or more experienced and skilled workers.

Sliding precious metals prices have raised the pressure on miners as they ready for pay talks.

Stimulus

Spot platinum on Friday closed at $1 450 an ounce, down around 35% from a record high of $2 240 hit in March 2008 and most South African shafts were losing money at this price.

Gold is down about 19% this year, losing its safe haven allure on concern the U S central bank will end its extensive stimulus for its economy.

Mining companies have been awarding above-inflation wage rises over the past decade, but with labour now accounting for over half their costs in South Africa, they are reaching a point where this is no longer sustainable for their income statements, especially as power and other costs climb steeply.

But even increases above inflation do not go far for workers at the bottom end of the pay scale who on average have eight dependants and are mostly drawn from poor rural areas.

Inflation is currently running at just under 6% and looks set to accelerate given recent weakness in the rand, which investors have sold off because of concerns about labour unrest in the mining sector.

Rising inflation especially for food will harden the resolve of workers.

NUM still represents most workers in the gold and coal sectors and to head off any challenge from Amcu in those shafts it will need to be seen taking a hard line with management.

Scaling back

The rivalry between the two unions triggered violence that killed over 50 people last year and tensions are running high.

An Amcu organiser was murdered recently, prompting a 2-day strike at platinum producer Lonmin [JSE:LON].

Amcu has not yet submitted its wage demands to platinum producers, who negotiate with unions on a company-by-company basis, but they can ill afford to be generous given current prices for the precious metal.

Anglo American Platinum [JSE:AMS], the world's top producer, now plans to cut 6 000 jobs from an initial target of 14 000 as it seeks to restore profits after falling into a loss last year.

It is hardly in a position to give big pay rises after scaling back its original plan under government pressure.

Gold and coal producers negotiate through the chamber of mines.

Gold companies include AngloGold Ashanti [JSE:ANG], Africa's top bullion producer, Gold Fields [JSE:GFI], Harmony [JSE:HAR] and Sibanye.

Coal producers include Anglo American [JSE:AGL] and Exxaro [JSE:EXX].


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