The Chamber of
Mines building in
Johannesburg “’ venue
for the new and
crucial mining talks.
Johannesburg, South Africa — 11 July 2013

South African gold producers and unions opened wage talks today, with labour groups set to table the largest-ever pay demands weeks after the precious metal’s steepest quarterly price slump on record.

Quoting an e-mailed response to questions, Bloomberg News explained that completing a protocol on how the process is conducted is the first item on the talks agenda. Unions are then due to explain their positions on pay and answer questions from employers.

The National Union of Mineworkers (NUM), which represents more gold miners than any other, is asking for increases of as much as 60%. The Association of Mineworkers and Construction Union (AMCU) is seeking to double the basic pay for underground workers. The wage requests are unprecedented, said a Chamber of Mines representative, and follow a 23% drop in gold prices in the first quarter.

“I’m confident that we’ll be able to reach a settlement that is acceptable to all parties,” mines minister Susan Shabangu told reporters. “As a former trade unionist, it doesn’t mean that when you start with 60% you’ll end up with 60%. It never happens.”

AngloGold Ashanti Limited, the world’s third-biggest producer, Gold Fields Limited, Harmony Gold Mining Limited and Sibanye Gold Limited are among the companies that are members of the chamber.

Union rivalry has fuelled wage demands, Eugene King, an analyst at Goldman Sachs Incorporated, wrote in a July 5 note to clients.

 “Worsening economics have put extra pressure on the miners to achieve a better outcome for their shareholders, but for AMCU and NUM this will be an acid test and hence both are demanding double-digit pay rises,” King wrote.

The AMCU, representing about 17% of workers, is the biggest in the nation’s gold industry after the NUM, which speaks on behalf of 64% of gold miners, according to the chamber

The UASA and Solidarity unions, representing workers in higher-skilled categories, have proposed wage increases of 18% and 14% respectively.

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