UPDATE 1-SAfrica rail, port strike widens to hit commuters

Mon May 17, 2010 10:11am EDT

Related Topics

* Transport strike enters second week

* Talks to end strike fail even after unions cut pay demand

(Recasts with commuter strike, adds industry, economist)

By Agnieszka Flak and Olivia Kumwenda

JOHANNESBURG, May 17 (Reuters) - A South African rail and port strike widened on Monday, threatening to bring Africa's biggest economy to a standstill with two million train passengers stranded as the industrial action entered its second week.

Weekend talks to end the strike over pay at state-owned logistics group Transnet [TRAN.UL] failed and both the company and unions said no new negotiations were planned.

The strike has dented exports of metals, fruit and wine to customers in Europe and Asia and slowed imports of automotive parts after nearly two-thirds of Transnet's 54,000-strong workforce joined in.

So far fuel supplies in South Africa and coal shipments to Europe and Asia have not been disrupted, officials said.

The strike is the latest protest in the country ahead of next month's soccer World Cup, and FIFA said imports of some equipment for the event have been affected.

The United Transport and Allied Trade Union (Utatu), and the South African Transport and Allied Workers Union (Satawu), asked union federations Fedusa and Cosatu to join the strike.

On Monday Utatu and Satawu also began a strike at South Africa's Passenger Rail Agency (Prasa) halting all commuter rail operations.

The unions want at least a 12 percent pay rise, while Transnet says it cannot afford more than 11 percent. The two unions represent some 85 percent of Transnet's staff, and their action has paralysed two-thirds of the company's services. However some workers returned to work on Monday, saying they could not afford to lose more income due.

Analysts and the central bank have criticised the unions, saying pay rises well above the 5.1 percent inflation rate would slow South Africa's economic recovery.

The government urged an early resolution to the passenger services action to minimise the impact on commuters and reduce the risk of violence by frustrated passengers.

MASSIVE DISRUPTION

Economists could not put an exact figure on losses from the strike, especially since many companies had anticipated industrial action and build up their inventories, but some estimated the loss in the hundreds of millions of rand.

"The effect almost day-by-day becomes exponentially bigger and then we quickly are getting into billions (of rand). A few more days and this will be massively disruptive to the economy," said Kevin Lings, chief economist at Stanlib.

Anglo American Plc's (AAL.L) iron ore unit in South Africa declared a force majeure on shipments last week, joining other global metal exporters including Xstrata XTA.L, which said it could not supply ferrochrome to its customers. [ID:nLDE64B2B7]

Transnet does not transport much coal to power plants, however a prolonged strike may hit imports, fuel supplies and exports of iron ore and coal once built-up stocks are used up.

Miners said they were running out of storage space and would need to cut production if they cannot ship products to ports.

Producers of fruit said they were already running out of storage for produce they could not ship and wine makers said exports had stopped. [ID:nLDE64C15O][ID:nLDE64D13V]

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