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Strikes shut down 40% of SA gold

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.

For more mining news go to our sister site miningmx.com


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