* Production affected at 16 of 23 mines involved in talks
* But mines reported quiet, in contrast to 2012 turmoil
* NUM ready to lower wage demands for only some categories
* Worker militancy stems from simmering union turf war
By Xola Potelwa
WESTONARIA, South Africa, Sept 4 (Reuters) - A strike for higher pay hit production at most of South Africa's gold mines on Wednesday, but the main union behind the stoppage said it was willing to relax some of its demands.
The stoppage, called by the National Union of Mineworkers (NUM), began at the evening shift on Tuesday, with many miners refusing to go underground.
Producers grouped in the Chamber of Mines said output at 16 of the 23 mines currently involved in talks was partially or severely affected on Wednesday morning.
The operators of the mines include South Africa's main producers AngloGold Ashanti, Gold Fields, Harmony Gold and Sibanye Gold.
"The majority of Harmony's operations have been severely affected, although all essential services personnel are at work," the company said in a statement.
However, the NUM, which represents two thirds of the country's gold mine workers, has already opened the prospect of a compromise, saying it was prepared to lower its pay increase demands for some specific employee categories.
NUM spokesman Lesiba Seshoka said the gold producers had made some proposals during talks in a bid to reach a deal.
"I can't say whether there was an improvement on the (pay rise) offer but they have made some proposals," Seshoka said.
He said the union would consult its members on Thursday.
In another positive sign, junior producers Village Main Reef and Pan African Resources said they had made separate pay agreements with NUM members in their workforces.
The gold industry stoppage is seen costing South Africa around $35 million a day in lost production, adding to the nation's economic woes as strikes over pay reduce output in other industries such as auto manufacturing.
"We're not working," said a striking miner at Gold Fields' South Deep mine at Westonaria west of Johannesburg. "We'll only go back down when we get our percentage that we've asked for. We've been begging them for too long now," he added, asking not to be named.
Several gold mines visited by Reuters appeared quiet on Wednesday, with security guards refusing to let reporters into the properties.
The peaceful legal strikes contrasted with the often violent illegal stoppages that brought turmoil to South Africa's gold and platinum mines last year, when more than 50 people were killed in labour clashes.
The mayhem slowed South Africa's economic growth and led to sovereign credit downgrades.
The rand recovered from a fall on Tuesday, buoyed by hopes for a smaller than expected dent to foreign currency earnings if the strike ends soon, although it remains close to August's four-year low of 10.51 against the dollar.
On Tuesday, President Jacob Zuma urged employers and unions to avoid another strike.
South Africa's mines once accounted for close to 80 percent of the world's gold production but its deep and dangerous shafts now only produce 6 percent.
Seshoka told SAFM radio on Wednesday that the union had told the employers' Chamber of Mines negotiators: "If you are prepared to move, then we may be prepared to move".
But Seshoka told Reuters the union still wanted a 60 percent increase in basic pay for entry-level underground workers, which would take it to 8,000 rand ($770) a month from 5,000 rand. The employers' offer is for a 6.5 percent rise, just above the current inflation rate.
The union's demands also included 15 percent pay rises for all other categories of workers and it was in this specific area that the NUM was willing to show flexibility, Seshoka said.
"For entry-level workers we are still where we were. We have not budged. But from the 15 percent we may be prepared to go lower but will accept nothing below double digits," he said.
In their deals, Village Main Reef and Pan African Resources have settled with their NUM-affiliated workers on salary increases of around 8 percent.
Charmane Russell, a spokeswoman for the producers, said there had been no formal revised offers from either side but they "have come much, much closer to finding one another."
The NUM's tough position over the lowest-paid workers is significant because it has been fighting to retain membership after losing tens of thousands of members to its hardline rival, the Association of Mineworkers and Construction Union (AMCU), in a union turf war that broke out last year.
The Chamber of Mines says about half of the lower-skilled gold mining workforce of 95,000 would fall into the entry-level category.
AMCU, whose members in the gold sector have not gone on strike yet, is seeking pay hikes of as much as 150 percent under the battle cry of a "living wage" and NUM has become more populist in a bid to fend off this challenge.
"I don't know if the strike will succeed or if it'll fail, but it's the right thing, it must be done so we try and get this money," said Ntsikelelo Sibaya, a 25-year-old mines contractor who said he had lost his job at Gold Fields in July.
Tit-for-tat killings linked to the union rivalry still occur on the platinum belt, where AMCU is now the dominant union and is currently in or about to embark on tough wage talks with producers such as Impala Platinum and Lonmin.