Johannesburg, South Africa — 20 May 2013 – The prospect of fresh strikes in South Africa’s already embattled mining sector resurfaced over the weekend after representatives of the National Union of Mineworkers (NUM) said the union would seek pay rises of up to 60% from gold and coal producers.

This comes, reports Fin24, as mining companies battle higher costs and falling prices in an already heated labour climate, and as the country hopes to avoid the 2012 wildcat strike action at platinum and gold mines that claimed the lives of 50 people and cost the industry and economy billions in lost revenue and production.

Mineworkers are mobilising to assert themselves, with the NUM fighting a challenge to its once near-monopoly in the shafts from the Association of Mineworkers and Construction Union (AMCU), which has poached tens of thousands of platinum miners from it in a violent struggle for members.

The NUM said in a submission to the Chamber of Mines that it was seeking an entry-level minimum monthly wage of R7,000 for gold and coal surface workers and R8,000 for those underground.

Industrial relations advisor to the Chamber of Mines Elize Strydom said the minimum wage for surface workers was currently R4,700 and for underground miners it was about R5,000, so the demands were for up to 60%. NUM also said it wanted 15% increases for “all other wage categories”, or more experienced and skilled workers.

Sliding precious metals prices have raised the pressure on miners as they ready for pay talks.

Spot platinum on Friday closed at US$1,450 an ounce, down around 35% from a record high of US$2,240 hit in March 2008, and most South African shafts are losing money at this price.
Gold is down about 19% this year, losing its safe haven allure on concern that the U S central bank will end its extensive stimulus for its economy.

Mining companies have been awarding above-inflation wage rises over the past decade, but with labour now accounting for over half their costs in South Africa, they are reaching a point where this is no longer sustainable for their income statements, especially as power and other costs climb steeply.

But even increases above inflation do not go far for workers at the bottom end of the pay scale who on average have eight dependants and are mostly drawn from poor rural areas.
Inflation is currently running at just under 6% and looks set to accelerate given recent weakness in the rand, which investors have sold off because of concerns about labour unrest in the mining sector.

The NUM still represents most workers in the gold and coal sectors and to head off any challenge from AMCU in those shafts it will need to be seen taking a hard line with management.

AMCU has not yet submitted its wage demands to platinum producers, who negotiate with unions on a company-by-company basis, but they can ill afford to be generous given current prices for the precious metal.

Gold and coal producers negotiate through the Chamber of Mines, which represents companies like Africa’s top bullion producer AngloGold Ashanti, Gold Fields, Harmony and Sibanye. Coal producers include Anglo American and Exxaro.

Source: Fin24. For more information, click here.