[miningmx.com] – Harmony CEO Graham Briggs laid out a “make or break’ scenario for his group – and the rest of SA’s mining industry in general – ahead of the upcoming wage negotiations between gold producers represented by the Chamber of Mines and the mining unions.
Commenting on results for the March quarter Briggs said Harmony would be proposing “an economic and social compact – the fundamental principles of which are partnerships, sustainability and job retention’.
He commented that, “Harmony will not survive high wage increases. Massive retrenchments will be inevitable. I think that all employees should be concerned about their jobs and should start looking after their jobs.
“Companies can give higher pay increases but will then go bankrupt. It seems to me to be stupid to grant the higher increases and then close the operation.’
Briggs was speaking against a background of apparently high pay increase expectations for the gold mines by unions following the sharp increases in entry level wages granted by the platinum mines last year.
He said Harmony had received wage demands from two unions so far but declined to reveal details saying he did not wish to “negotiate in public’.
Asked why he believed such a compact could be successfully negotiated given previous repeated failures to do so by the gold mining industry Briggs replied, ” it has been achieved before. Harmony paid far less than the other gold mining companies in the mid-90’s because of its difficult operating conditions.
“We compensated for that with a pay equalisation process in 2007/2008 and now pay comparable rates to the other gold mining companies. We did it in the past and we can do it in the future.’
Asked whether this approach to the upcoming wage negotiations was limited to Harmony Briggs replied that Harmony was negotiating as part of the Chamber of Mines and that “this is the way we are thinking.’
He referred to the broader consultations taking place between government and the mining industry on its economic future and the fact that the entire mining industry was facing similar tough conditions to the gold mining sector.
“South Africa needs a wake-up call on this, ” he commented.
Harmony’s March quarter results show the group held its ground and increased its production profit to R643m (December quarter – R618m) but still reported a headline loss of R262m (R486m) while cash reserves dropped to R701m at end-March from R1.4bn at the end of December.
The details of the various operations underscore the points that Briggs made on rising costs resulting in restructuring of mines and continuing job losses with Harmony dropping its total labour force from 36,915 in 2012 to 31,880 currently.
But, despite this overall reduction in worker numbers, Harmony’s total wage bill has continued to rise because of the persistent above average inflation pay increases granted in recent years.
Having restructured the Kusasalethu mine Harmony management has now scaled down ore body development at Masimong so cutting the expected life of that mine to two years and is looking at restructuring the Doornkop mine after it had made a net loss over the past three quarters.
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