Strike contagion shuts down 40% of SA gold

[] – STRIKE contagion was unleashed on South Africa’s
gold industry last night following confirmation that workers had downed tools at the
remainder of AngloGold Ashanti’s South African mines.

The upshot is that combined with the illegal strike activities at Gold Fields, nearly 40%
of South Africa’s productive gold capacity was down – a development that an analyst
said was “catastrophic’ for the industry and was sure to catalyse downsizing in the

On an annualised basis, some 2.36 million ounces of gold production, which includes
output at all of AngloGold Ashanti’s operations (2011: 1.6m oz), is affected by strikes
that the National Union of Mineworkers (NUM) appears powerless to influence. South
Africa produced just over 6m oz of gold in 2011, according to data supplied by Roger
Baxter, head of economics and strategy at the Chamber of Mines of SA.

“Any increase in wages that comes from these strikes could catalyse downsizing of
the South African industry,’ said David Davis, an analyst for SBG Securities. “I’m sure
that Gold Fields will probably bring forward its downsizing [of its South African
mines]. This is potentially catastrophic,’ he said.

AngloGold Ashanti said last night that strike action at its Mponeng mine had also been
extended – as of the night shift, to workers at West Wits and the balance of its Vaal
River Regions’ operations.

“This interruption to normal mining and processing operations comes amid
unprocedural disruptions elsewhere in South Africa’s gold and platinum mining
sectors,’ the company said in a statement. Shares in AngloGold Ashanti were down
1.9% in early morning trade on the JSE.

AngloGold said that its priority was to “maintain safety, peace and stability at each
site and to continue a constructive dialogue with all employees, their representatives
and other stakeholders’.

SBG Securities’ Davis said that while the gold companies could request for interdicts
that would enable them to threaten striking workers with dismissal, it was virtually
impossible to implement them without police protection at the mines.

No formal demands had yet been issued, said AngloGold Ashanti. “The company is
following the necessary standard legal procedures in order to have the latest work
stoppage formally declared as unprotected,’ it said.