JOHANNESBURG (Reuters) - South African union leaders warned on Monday, a day before a strike in the gold sector, that mine owners’ handling of pay talks could provoke violence, and bosses said wage hikes would force mine closures and cost thousands of jobs.
The National Union of Mineworkers (NUM), which represents about two-thirds of more than 120,000 unionized gold miners in Africa’s biggest economy, is set to strike from Tuesday.
With stoppages in the auto industry and the construction sector already sapping the struggling economy, shutting gold mines could cripple an industry that has produced a third of the world’s bullion but is now in rapid decline.
Labor and management are poles apart on the issue of wages, with the NUM seeking 60 percent pay hikes for entry-level miners and its more hardline rival, the Association of Mineworkers and Construction Union (AMCU), pushing for 150 percent raises.
Companies say they cannot afford this in the face of soaring costs and depressed prices. The president of South Africa’s Chamber of Mines warned unions against stoking workers’ hopes.
Mark Cutifani, who is also chief executive of mining giant Anglo American said, “Promoting expectations above the capacity of the industry to pay is a dangerous road that may have tragic consequences for employees who do not understand how close we are to economic devastation in certain sectors.”
“If we lose each other in the present discussions, we will count the costs in mines closed and tens of thousands of jobs lost,” he wrote in a commentary in the Business Day newspaper.
South Africa’s gold and platinum sectors are still recovering from a wave of violent, wildcat strikes last year. Stemming from a turf war between the NUM and AMCU, it cost billions of dollars in lost output and triggered damaging sovereign credit downgrades. More than 50 people were killed.
Business Day said gold producers were considering a pre-emptive lockout at the mines. The Chamber of Mines, which negotiates on behalf of firms, told Reuters a lockout was an option but it would be taken as a “last resort”.
AMCU President Joseph Mathunjwa, whose union has not yet called a strike, said a mines lockout would provoke trouble.
“I have informed the minister of police that the manner in which the gold CEOs want to approach this wage negotiation, through an offensive lockout, will result in violence,” he said.
“A strike is not what we are after, we are being pushed into a corner,” Mathunjwa said.
Critics say President Jacob Zuma and his ruling African National Congress (ANC) have paid more attention to a small and wealthy business elite, including mine bosses, and ignored the needs of South Africa’s working class, poor and unemployed.
The government is anxious to keep a lid on labor unrest and potential job losses before elections next year.
A gold industry shutdown could cost South Africa more than $35 million a day in lost output, according to calculations based on the spot gold price and a Chamber of Mines estimate that the sector would stop producing about 760 kg a day.
South Africa’s gold industry, which once accounted for almost 80 percent of global bullion output, now produces just 6 percent of the world total.
It has been laid low by a combination of geological and economic setbacks. After more than a century of mining, the remaining ore lies deep underground and is costly and dangerous to extract. Labor and power costs have also soared.
Monday brought some relief however from the strike pressure, when workers at petrol stations and car dealerships postponed for a week a stoppage which was scheduled to start on Monday.
But striking car manufacturing workers stayed away from work after rejecting a double-digit wage increase offer on Thursday. The auto industry strike is costing the economy an estimated $60 million a day.
Labor worries pushed the rand to four-year lows last month.
Companies which will be hit by Tuesday’s strike include main gold producers AngloGold Ashanti, Gold Fields, Harmony Gold and Sibanye Gold.
Additional reporting by Olivia Kumwenda-Mtambo; Editing by Louise Ireland and Pascal Fletcher