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Deal reached to end S.African gold mine strike
August 2, 2011 / 4:15 PM / 6 years ago

Deal reached to end S.African gold mine strike

* Strike in S.African gold sector ends

* Gold price at new record highs

* Workers to return to work with Tuesday night shift

* Strikes hurt growth in Africa’s largest economy

By Ed Stoddard and Olivia Kumwenda

JOHANNESBURG (Reuters) - A strike in South Africa’s gold mining sector ended Tuesday after a 2-year wage deal was clinched, unions and the Chamber of Mines said.

The strike at AngloGold Ashanti (ANGJ.J), Gold Fields (GFIJ.J) and Harmony (HARJ.J) began last Thursday and halted output worth up to $25 million a day at bullion’s current record prices.

The unions said their members would return to work on Tuesday with the night shift but it will take a day or two before the mines are back to full production.

About 100,000 gold mine workers at the trio of companies and a smaller miner downed tools Thursday, extending a wave of strikes across Africa’s largest economy that threaten to curb growth or even push it into contraction.

Harmony said it estimated the strike had cost it about 500 kg or close to 18,000 ounces in lost production.

The companies’ share prices extended gains on the news as gold scaled new highs over $1,635.00 an ounce on growing concerns about Europe’s debt woes and anaemic U.S. growth data.

Unions had been seeking pay increases of 14 percent from the gold industry but the chamber of mines, which negotiated on behalf of the companies, said they had settled on for 7.5 to 10 percent in the two-year deal.

“We have also looked at housing allowances and living out allowances; we are very pleased with the outcome,” Frans Baleni, the general secretary of the powerful National Union of Mineworkers, told Reuters.

South African mineworkers also get housing and other non-wage benefits in their packages. Baleni said the monthly housing allowance had been raised by 120 rand for the next two years to 1,640 rand ($243).

Solidarity, one of the three unions involved, said in a statement that the deal was not set in stone and would be revisited next June if inflation was to exceed the wage increases that had been agreed.

Economists say inflation is being fueled partly by high wage settlements which have become a feature of South Africa’s annual mid-year “strike season,” and which are eroding its investment status. Its workforce is already more expensive and less efficient than those in its emerging market peers.

There is little political will to rein in the unions as the ruling African National Congress is in an alliance with organized labor, which delivers it millions of votes.

The unions argue that headline inflation does not show the full effect of rising fuel and food prices on their members’ incomes. They also point to sky-high commodity prices and executive pay to justify their contract demands.


After investors pounded them last week the share prices of South Africa’s gold producers, which were already up due to bullion’s latest record run, increased their gains in late afternoon trade.

Harmony led the way as its shares added 4.60 percent while Gold Fields closed over two percent higher and AngloGold rose 1.60 percent.

Harmony had the most at stake in the strike as over 90 percent of its output comes from South Africa while in AngloGold’s case the country only accounts for about 40 percent.

The gold strike was relatively short-lived. A week-long walkout at South Africa’s main coal mines that had threatened exports and supplies to domestic power stations ended Monday. A strike in the fuel sector lasted almost three weeks.

A strike in the diamond sector continues while talks are taking place to avert stoppages at state-run power utility Eskom ESCJ.UL and the vital platinum sector. NUM said late on Tuesday it had failed to reach a wage agreement with Eskom and talks would continue Wednesday and Thursday.

The union also said it had rejected the latest offer from Impala Platinum (IMPJ.J), the world’s second largest producer of the precious metal, and would meet with it again Wednesday in an attempt to resolve the impasse.

Strained labor relations in South Africa have lengthened the list of investors’ concerns that include nationalization talk in ruling party circles and high rates of violent crime linked to glaring income disparities and high unemployment. ($1 = 6.724 South African Rand)

Additonal reporting by Agnieszka Flak, Editing by Marius Bosch and David Stamp

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