UPDATE 1-South Africa's main mine union to take strike vote in gold sector

Wed Aug 21, 2013 5:03pm EDT

* Gold producers and unions remain poles apart over wages

* Auto industry strike costing $60 mln a day

* Cost of living pressures stoke worker demands

By Ed Stoddard

JOHANNESBURG, Aug 21 (Reuters) - South Africa's National Union of Mineworkers said on Wednesday it would ballot its members this week on whether to go on strike after gold miners' wage talks stalled, raising the prospect of crippling stoppages in an industry in terminal decline.

"We will go and consult with our members and put it to a vote. We are going to strike, there is no question about it, I just can't say when," NUM spokesman Lesiba Seshoka told Reuters.

The country's chamber of mines said it was still in talks with the Association of Mineworkers and Construction Union (AMCU) and the Solidarity union, but NUM matters the most as it represents about 64 percent of the roughly 140,000 gold miners in the country.

Gold mine stoppages would inflict more damage on Africa's largest economy, which is already losing $60 million a day to a strike by 30,000 workers in the car manufacturing sector that accounts for 6 percent 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 6 percent hike for some categories, and unions.

NUM is seeking a basic wage for entry-level underground workers of 8,000 rand ($790) a month, a 60 percent increase.

"We are miles apart and so the only sensible thing to do is embark on a strike," NUM's Seshoka said.

NUM and the small UASA union both walked out of the talks and applied for what is known in South Africa as a "certificate of non-resolution" from the government mediator, which was granted. This effectively allows them to strike.

NUM's more hardline rival the Association of Mineworkers and Construction Union (AMCU), with about 17 percent of the gold labour force, has submitted demands as high as 150 percent.

President Jacob Zuma and his ruling African National Congress, criticised for their handling of violent mines unrest last year in which more than 50 people were killed, are keen to avert more labour strife ahead of elections next 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 failed to 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 spokeswoman for the gold producers which include AngloGold Ashanti, Gold Fields , Harmony and Sibanye Gold.

Inflation data released on Wednesday will do little to cool union demands as it showed headline inflation in South Africa accelerated to 6.3 percent in July from 5.5 percent in June.

Worryingly, food inflation rose by 6.8 percent, 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 percent of costs and gold's spot price about 30 percent 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 percent 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 percent of the world total. It was the country's worst year for bullion production since 1905.

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