Sibanye-Stillwater brings peaceful, successful wage talks season to close

CORRECTION – AMCU was not a signatory to this wage agreement as stated in an earlier version of this article.

SIBANYE-Stillwater today concluded a new three-year wage agreement with its major unions bringing an end to the 2018 round of talks the first began in May and also involved AngloGold Ashanti, Harmony Gold and Village Main Reef.

“There are now agreements with all the companies in the bargaining forum,” said chief negotiator for the Minerals Council, Motsamai Motlhamme in a statement. “This bodes well for the gold sector for the next three years,” he said.

All in all, this was a highly successful round of talks and perhaps reflects an understanding among all levels of the industry, unions included, that the country’s gold sector is in its latter stages and needs to be nursed through to the end. There was no mention, by way of example, of strike action; not even by the more militant Association of Mineworkers & Construction Union (AMCU), but which is yet to sign the agreement.

Sibanye-Stillwater, which was the last of the firm’s in the council’s bargaining group to conclude its wage talks, signed off on increases to the basic wage of category 4-8 surface and underground employees of R700 in year one; R700 in year two; and, R825 in year three. Miners, artisans and officials will receive increases of 5.5% in year one and 5.5% or CPI (whichever is the greater) in years two and three of the agreement.

In addition to the basic wage, the parties agreed to an increase in the current living-out allowance by R50 to a maximum of R2,150 per month from 1 September 2018. Sibanye-Stillwater said it would increase the living-out allowance by R75 to a maximum of R2,225 per month on 1 September 2019 and by R100 to a maximum of R2,325 per month in the year that follows. 

Sibanye-Stillwater, which employs 32,231 people, has also agreed to increase incrementally the current minimum medical incapacity benefit of R55,000 to R60,000 over the three-year period by increasing the benefit by R1,500 on 1 July 2018; R1,500 on 1 July 2019; and R2,000 on 1 July 2020. 

The company said on November 1, during its third quarter results presentation, that its gold division was still recovering from a series of incidents earlier this year which claimed the lives of 21 miners as of July. One event was an earth tremor that knocked out a large section of the firm’s Masakhane shaft at Driefontein mine.

As a general guide, investors ought to work on similar gold production numbers to this year for 2019, said Neal Froneman, CEO of Sibanye-Stillwater. In its third quarter production update, Sibanye-Stillwater said 2018 output would be between 1.13 and 1.16 million ounces, lower than the 1.17 to 1.21 million oz in previous guidance.

The company also extended its hedging programme on gold in order to mitigate the effect of interruptions on production.

Charl Keyter, Sibanye-Stillwater CFO, confirmed that about 5,700kg of gold (182,400 ounces) had been hedged at an average floor and cap of about R584,000/kg and R617,000/kg respectively. This takes total hedged gold for the year to 11,742kg (375,744 oz) – about 32% of production – at an average floor and cap of R560,000/kg and R590,000/kg respectively.