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Signs point to tough SA gold wage talks
Allan Seccombe
Posted: Fri, 24 Apr 2009
[miningmx.com] -- IF THE wage talks at junior gold producer Simmer & Jack (Simmers) are anything to go by, negotiations to settle a fresh two-year wage agreement with major gold firms are going to be fraught with difficulty.
Trade union Solidarity, admittedly one of the smaller unions in the South African mining sector, said on Friday talks with Simmers over a wage increase deadlocked at the company’s Buffelsfontein mine this week and a dispute has been declared.
Both Solidarity and the National Union of Mineworkers (NUM), one of South Africa’s largest labour organisations, have laid out their demands ahead of the start of talks in May with the Chamber of Mines, which represents AngloGold Ashanti, Gold Fields and Harmony Gold.
The unions are also negotiating two-year wage deals with coal companies represented by the chamber. These include Anglo Coal, BHP Billiton and
Xstrata.
The unions want a 15% wage increase for their members as well as a host of related demands for workers, all bearing a financial implication for mining companies.
The chamber’s chief negotiator Elize Strydom said the wage increase demand as well as other demands, including improved medical aid payments and increased minimum wages, had “significant cost implications”.
Labour makes up half of mining companies’ costs. The sector, like its counterparts offshore, has grappled with soaring input costs on items like steel, chemicals and fuel, but these have showed signs of stabilising and in some cases coming down.
South African companies have also experienced steep electricity price hikes as power utility Eskom embarks on a programme to increase capacity after it effectively shut down the country’s mines in January 2008 because of power shortages.
Harmony CEO Graham Briggs said the wage demands and extras “add up to quite a
significant amount”. The participants in the chamber’s negotiating group have yet to discuss the demands, he said.
“There’s a fair way to go yet. We’ve discussed the demands internally at Harmony to decide how to respond and we are looking at the financials and the implications these demands will have. It’s too early to comment,” Briggs told Miningmx.
South African consumer price inflation in February was 8.6% and the South African Reserve Bank forecasts the average inflation rate this year at about 6%.
At Simmers, Solidarity started talks in March with a 15% wage hike demand against the company’s offer of 5%. Simmers upped its offer to 8% and the union lowered its demand to the consumer price index plus 2%, with a floor of 10%.
It’s not unrealistic to expect the centralised bargaining council to develop a similar pattern in negotiations with the majors. Unions argue that fuel and food prices have risen sharply over the year.
“The
current economic climate will definitely put pressure on this year’s negotiations,” said Solidarity spokesman Jaco Kleynhans.
“But Solidarity’s demands will take into account the financial successes of mining companies during the past two years and for this reason, the companies are now still able to remunerate their employees with a liveable wage.
“In addition, the gold price recently traded at record levels, which places gold companies in a very favourable financial position,” he said.
The rand gold price hit a record high of more than R300,000/kg in February 2009, but has since fallen back to about R258,000, giving mining groups a healthy margin.
South African gold production has fallen steadily over the past three decades, reducing the country to the world’s number three supplier behind China and the United States.
NUM too has said it has a mandate from its members. “The mandate is clear and our members say they expect no excuses,"
NUM general secretary Frans Baleni said.
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