Strikes shut down 40% of SA gold

Strikes shut down 40% of SA gold

2012-09-27 10:30

Johannesburg - Strike contagion was unleashed on South Africa’s gold industry last night following confirmation that workers had downed tools at the remainder of AngloGold Ashanti’s South African mines.

The upshot is that combined with the illegal strike activities at Gold Fields [JSE:GFI], nearly 40% of South Africa’s productive gold capacity was down – a development that an analyst said was “catastrophic” for the industry and was sure to catalyse downsizing in the industry.

On an annualised basis, some 2.36 million ounces of gold production, which includes output at all of AngloGold Ashanti’s operations (2011: 1.6m oz), is affected by strikes that the National Union of Mineworkers (Num) appears powerless to influence. South Africa produced just over 6m oz of gold in 2011, according to data supplied by Roger Baxter, head of economics and strategy at the Chamber of Mines of SA.

“Any increase in wages that comes from these strikes could catalyse downsizing of the South African industry,” said David Davis, an analyst for SBG Securities. “I’m sure that Gold Fields will probably bring forward its downsizing (of its South African mines). This is potentially catastrophic,” he said.

AngloGold Ashanti [JSE:ANG] said last night that strike action at its Mponeng mine had also been extended – as of the night shift, to workers at West Wits and the balance of its Vaal River Regions' operations.

“This interruption to normal mining and processing operations comes amid unprocedural disruptions elsewhere in South Africa’s gold and platinum mining sectors,” the company said in a statement. Shares in AngloGold Ashanti were down 1.9% in early morning trade on the JSE.

AngloGold said that its priority was to “maintain safety, peace and stability at each site and to continue a constructive dialogue with all employees, their representatives and other stakeholders”.

SBG Securities’ Davis said that while the gold companies could request for interdicts that would enable them to threaten striking workers with dismissal, it was virtually impossible to implement them without police protection at the mines.

No formal demands had yet been issued, said AngloGold Ashanti. “The company is following the necessary standard legal procedures in order to have the latest work stoppage formally declared as unprotected,” it said.

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  • heathway.master - 2012-09-27 11:10

    And now the really bad news for all South Africans. Come Christmas when the mines being in a state of economic collapse from the illegal unprotected strikes, do not issue full 13th cheques and the usual very generous production and merit bonuses the workers have become used to, white management will be accused of evil racist policies and unfair discriminatory remuneration practises, and all the striking will again commence to rectify the grossly unfair mine pay practises they have adopted out of shear desperation to remain open and economically viable.

  • danie.strydom.7 - 2012-09-27 11:14

    Happy days ... time to do some currency trading. Rand to go down at least another 7% by the end of 2012 is what I would say .

      ianon.ym - 2012-09-27 11:26

      Second that - perhaps more depending on certain immediate outcomes.

  • deon.louw.7505 - 2012-09-27 11:36

    Maybe it is time to modernise some mines, more robots and less people. It is time to think of the bigger picture.

      janse.vanrensburg.7 - 2012-09-27 12:20

      I've often thought of getting involved in this idea. solar powered Stirling engines powering autonomous robots running generic algorithms and outcome based neural nets.

  • sean.odonnell.1466126 - 2012-09-27 11:37

    Illegal strikes for better wages could end up with no wages and a collapsing economy. I wonder if they can think that far ahead?

      acm.munro - 2012-09-27 16:35

      Another option the mines might follow is to down scale - I wonder whether the strikers have considered this: If retrenchments follow, who will be retrenched first, somebody who went on strike or a dependable worker who pitched up for work under difficult circumstances?

      heathway.master - 2012-09-27 16:36

      Once the unemployment, poverty and hunger bites, then surely they must turn on all those who grow industry and do not spend their time destroying it. They will still have food on their tables as they are prepared to work for what their employers offer them. They will however be turned on and brutally victimised because they are not starving like the employed ungrateful and entitlement crazed masses. As the rector of the OFS University has just said, it is frightening how labour expect to earn more than the skilled and educated, who keep the economy afloat and at one time before wall to wall strikes, actually growing.

  • juannepierre - 2012-09-27 11:52

    My industry thrives in a crisis... I can't help from thinking this is good news.

  • LeahKnott28 - 2012-09-27 12:13

    Why is it that companies have to follow the long legal route to stop illegal and violent strikes and yet illegal strikers are not only NOT penalised for their illegal action but they're then still offered increases above what is actually financially feasible hence all the forced downsizing after the strikes are over. The platinum mining sector as an example had to retrench over 1200 workers due to the strike and cancel a new development with the potential for 3000 new jobs and all this just after they laid off another 4800 people before June 2012. And now all the remaining miners will get better salaries but the mine will be less productive resulting in less income and thus further downsizing and lay-offs. I am in full support of people "peacefully" protesting for what they believe in but if it becomes a danger to everyone else then why are they rewarded for it? If it's an illegal or violent strike - no negotiation - end of story!!! We are ALL bound by the laws of this country and should follow the correct procedures in this respect. There is no grey area in this respect. And the government merely issues a few stern warnings about how it won't be tolerated but in reality just rolls over and allows the complete violation of our Constitution as well as every other citizens rights. Wish they would actually serve the people for a change but I won't hold my breath, seems they're too embroiled in internal disputes and power struggles over who should have more power and money!!

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