Harmony Gold’s
Kusasalethu mine
Johannesburg, South Africa — 06 September 2013 – Production at South Africa’s biggest gold mines is weathering the industry’s third strike in as many years at this stage, as more strident demands are leading to divisions between the
country’s unions.

AngloGold Ashanti Limited’s Mponeng mine, Harmony Gold Mining Company’s Kusasalethu mine and Sibanye Gold Limited’s Driefontein mine operated normally yesterday, according to the Chamber of Mines, as the Association of Metalworkers and Construction Union (AMCU) held back from joining a strike by the National Union of Mineworkers (NUM), reports Bloomberg News.

The AMCU, representing a majority of workers at the three mines, is seeking to gain workers’ support and usurp the NUM’s position as the dominant labour group in the industry, partly by outpacing its demands for better pay. The NUM still represents about two-thirds of the nation’s 107,000 gold miners.

For mine operators, “the advantage is labour is divided,” Mark Rosenberg, an Africa analyst at New York-based Eurasia Group, said by phone. “The rise of AMCU is undermining the traditional sector-wide collective bargaining in gold.”

Three of AngloGold’s six South African mines ran normally yesterday. During the 2011 stoppage none of its mines operated.

The AMCU, founded by expelled NUM member Joseph Mathunjwa, represents 73% of workers at Kusasalethu, 65% at Driefontein and the majority at Mponeng. The union is talking to companies and a strike is a “last resort,” Mathunjwa said.

“AMCU is playing cat and mouse with the chamber and the NUM,” said David Davis, a Johannesburg-based analyst at SBG Securities Limited. “If there’s any agreement with NUM, then AMCU may well go on strike.” The chamber represents companies in negotiations.

The NUM is asking for a 60% pay increase to R8,000 (US$783) a month for entry-level gold miners, while the AMCU is seeking R12,500. The demands jar with the Chamber of Mines offer on August 29 of a 6 to 6.5%.

While splits between rival unions over demands may have helped keep mines open, it also complicates wage negotiations.

“It’s difficult to get business done as efficiently as possible,” Rosenberg said. “There are multiple players and then the intra-union rivalry is probably driving militancy.”

“While no formal revised demand has been tabled, positive discussions have been held,” said Charmane Russell, spokeswoman for the chamber, referring to the NUM talks.

Still, the chamber maintains that a 27% drop in gold prices since a peak of US$1,900/oz in 2011 makes it hard to offer raises at above South Africa’s 6.3% inflation rate.

While Harmony’s Kusasalethu stayed open yesterday, output at its nine other mines was “severely” or “significantly” affected by the dispute. Sibanye’s Kloof was severely affected and Beatrix was significantly affected, the chamber added.

“It could be a prolonged strike,” Davis said. “I don’t think the mining companies are going to budge.”

Source: Bloomberg News. For more information, click here.