A tough round of
mining wages talks
begins next week
 
Johannesburg, South Africa — MININGREVIEW.COM — 13 May 2009 – South Africa’s gold producers and trade unions kick off wage negotiations next week in talks both sides expect to be tough, because workers have demanded pay increases amounting to nearly double the inflation rate.

Spokesman Jabu Maphalala of the Chamber of Mines, which will negotiate on behalf of big South African mining companies, told Reuters the talks would start on Wednesday and Thursday next week for the coal and gold sectors respectively.

The National Union of Mineworkers (NUM) – which represents some 190 000 workers in the two sectors – and two other smaller unions have asked for a 15% wage increase from gold and coal producers, compared to an inflation rate of 8.5 %.

“We shall go into the talks with a sober mind, and hope to come to an agreement that will be beneficial for the industry,” Maphalala told Reuters. “The 15% demand is on the wages alone – there are also other increases that have been asked for, and all these have huge cost implications,” he added.

The NUM has also asked for improved medical cover, and higher allowances for workers living outside company hostels. The new wage deal will take effect in July 2009 for two years.

Wage negotiations in the gold sector are watched closely by markets because there is a chance of disruption in output, as experienced in 2005 when about 100 000 workers went on strike for days in the country’s most serious gold mining stoppage in nearly two decades, costing gold firms about US$20 million (R180 million) a day.

“Wage negotiations in the coal and gold sectors are likely to be extremely difficult – breakdowns can be expected and strikes are possible,” said Mike Davies, Middle East & Africa analyst at political risk consulting firm Eurasia Group.

The NUM has said its demand is meant to ensure that workers enjoy the benefits of the robust gold price, which has withstood the shocks of global economic turmoil and weaker commodity prices better than other metals, and to shield members from inflation.

Among the gold producers represented by the Chamber of Mines, are AngloGold Ashanti, Gold Fields and Harmony Gold. The Chamber also represents coal producers, including Anglo American Plc and Xstrata.