HARMONY Gold said it has lost between 10 and 15 production days at Kusasalethu where an unprotected strike drew to a close today – courtesy of Joseph Mathunjwa, president of the Association of Mineworkers & Construction Union (AMCU) whose members were heavily represented in the action.
Mathunjwa is thought to have personally intervened in the strike which was driven by the local branch of AMCU. He said he would not condone unprotected strike action and ordered branch members back to work.
In terms of the agreement between members of the union and Harmony management, the company will press ahead with disciplinary action against employees who staged an underground sit-in in January as well as those engaged in the latest strike action.
Harmony said in an announcement earlier today that: “After six days of ongoing unprotected industrial action at the mine, Harmony management and AMCU leadership have reached an agreement, and all employees reported to work this morning”.
The actual lost production could be as much as 15 days, however, said Marian van der Walt, spokeswoman for Harmony. At a current rand gold price of R553,818/kg, this is top line revenue of R124m although at the rand price of gold is currently at a six month high. Kusasalethu produces about 50kg per day so the gold production losses would be between 150kg and 225kg.
“We are relieved that Kusasalethu is back to normal,” said Peter Steenkamp, CEO of Harmony Gold. “Unprotected industrial action affects the mine’s viability, its employees and their families. “It is prudent that the Kusasalethu team now continues to produce safe, profitable ounces in line with its plan,” he added.
What Steenkamp doesn’t say, however, is Harmony’s assessment of Kusasalethu’s long-term viability given that the mine has struggled with grade and labour problems in the past. The company has said that strike action would undermine the operation’s viability. “We have started our planning process for the 2018 financial year so we will see where that goes,” said Van Der Walt.
Last year, Harmony announced that it would close Kusasalethu in about five years compared to its previously stated life of mine of some 24 years, saying that a harvesting strategy would be pursued.
Kusasalethu produces about 13% of Harmony Gold’s total one million to 1.1 million ounces a year in production, and generates 10% of total cash flow.
The current dispute at the mine has its roots in an underground sit-in in January by about 40 employees who were protesting against non-payment of a bonus and the removal of a senior manager at the mine.
At the time, Harmony said it would launch an independent investigation to establish how communication with the employees had broken down. The bonus in question was at the discretion of Steenkamp and related to production targets.
Objecting to the disciplinary proceedings against the 40 miners, AMCU called a go-slow, observed by about three-quarters of the workforce. Harmony responded by suspending AMCU branch leadership which then led to the strike in March.
