[miningmx.com] – JULY 11 represents ground zero for 2013’s crucial wage negotiations for the gold industry. Today is the day when the first plenary meeting is held at the Chamber of Mines offices in Johannesburg in which about 120 unionists will sit down with 14 employer representatives – two from each of the seven companies represented – to hear formal submission of wage demands, described only by the chamber as “steep’.
What happens then is likely to be a long-winding road. According to Elize Strydom, senior negotiator for the Chamber of Mines, the hope is that a new wage deal can be hammered out by mid-September; some two months of hard-talking.
Behind closed doors, however, that’s a hope rather than an expectation. Should the wage negotiations lapse into strike action – and there often is strike activity during this period – South Africa could be into its summer months before the gold sector knows how it must plan for labour costs.
The protagonists stack up as follows. On the employer side, there’s AngloGold Ashanti, Gold Fields, Harmony Gold, Sibanye Gold, Village Main Reef, Evander Gold Mines and Rand Uranium.
For the unionists, there’s the National Union of Mineworkers (NUM) representing 65.5% of gold industry employeers, UASA (6.9%), Solidarity (2.4%) and, provided it formally joins and stays in the central bargaining process that is de rigeur in the gold sector, the Associated Mineworkers & Construction Union (AMCU), representing 17% of workers. A further 8.4% of labour are not unionised.
All in all, the negotiations represent 120,000 of the 140,000 employees in the South African gold sector which makes them pretty much representative.
Earlier this week, there was a pre-negotiation workshop presided over by the chamber in which the ssame 120 union leaders in the plenary today were briefed on gold industry prospects.
The aim of the workshop was to describe the condition of the gold sector in terms of “economic realities’ as the chamber has termed it. According to reports, AMCU representatives attended the workshop.
Key to the entire discussion, however, will be how to meet worker expectations without destroying an industry that is currently 60% underwater before adding in stay-in-business capital. It may look like an impossible job but it could lead to some interesting innovations such as multi-year wage agreements that extend over more than the traditional two-year period.
Productivity may take centre stage, too, depending on the findings of a recently completed chamber task team into how 80 additional productive shifts per year can be added to the current 220 productive shifts achieved per year – a suggestion that will ask of unions to consider multi-shifting. As Roger Baxter, Chamber of Mines senior economist and strategist, says: “Other countries are mining more intensively than we are’.
So much is at stake. At the current production and cost trajectories, Baxter believes South African gold production will fall to below 100 tonnes by 2020 from 166 tonnes today and, staggeringly, far, far below the 1,000 tonnes which represented South Africa’s gold industry at its zenith in 1970.
There’s no doubting the economic reality that South Africa’s gold industry is mature. Having provided a third of all gold ever mined, the country is now the world’s sixth largest gold producer.
But Baxter thinks it is being hastened to its end when, in fact, is dynamo effect on the South African economy is still reflected in that it constitutes a tenth of all merchandised exports.
Both AMCU and the NUM have tabled wage demands for entry-level workers at between 60% and 100%. Even Solidarity, thought to be asking for a 10% increase in cost-to-company, is demanding a 12% increase on basic wages.
The word from the gold producers is that anything above single-digit wage increases cannot be supported. It’s a comfort, therefore, to put wage demands into historic context. Hefty opening demands have always been narrowed at the final round to several percentage points above inflation.
The gold sector will be looking for replication of Aquarius Platinum’s 7.5% to 9% increase at its Kroondal Platinum mine. One gold analyst calls it a “red herring’ indicator; a one-off agreement based on the dire economic need of the mine. The South African gold sector, however, could argue much the same economic reality now with the gold price in the doldrums. And it intends to.
