[miningmx.com] – THE good news is that the South African government’s Framework Agreement for a Sustainable Mining Industry is likely to be signed on Wednesday (July 3), according to a statement from government spokesperson, Thabo Masebe, quoted by Sapa.
The question is whether the Associated Mineworkers & Construction Union (AMCU) will be one of the signatories.
It was announced today that deputy president, Kgalema Motlanthe, will re-convene a meeting of unions, government ministers and mining businesses first held on June 14 aimed at bringing an end to on-mine lawlessness. Ultimately, the initiative was the government’s best effort at restoring investor confidence in the industry following a wave of protests linked to wage grievances, but also related to a raft of social ills and inter-union rivalry.
However, industry sources aren’t saying whether they think the agreement will receive the full endorsement of all unions. Their reticence is possibly owing to the apprehension that AMCU’s position cannot be anticipated with confidence.
But it would be an important step were AMCU a signatory. The framework agreement may just be a revived version of the Chamber of Mines’ earlier peace declaration, complete with platitudes and other broad statements of intent, but it does carry the presidential seal, as it were. It’s not binding in law, but it has the political weight.
It also has practical implications. One section of the draft framework agreement sets down the importance for a protocol governing ensuing wage negotiations.
As such, the framework agreement is a neat preface to the proposed pre-negotiation workshop planned by the Chamber of Mines in an effort to focus minds ahead of centrally negotiated gold wage talks.
As the chamber’s senior negotiator, Elize Strydrom, describes it, the workshop is about setting down the “economic realities’ in which the gold industry finds itself.
“We need to agree on a protocol that dictates the rules of the game. If the framework agreement is signed, we will be able to say the protocol is decided,’ says Strydom. “It’s very important that we all understand, and we are all committed on how to engage.’
Wage negotiations officially kick off on July 11 and will involve 120 union representatives – who will have earlier attended the workshop – as well as seven gold companies. Unions will formally table their demands – thought to be steeper than usual – and motivate for the demands.
The intention is that a new, multi-year wage agreement can be hammered out within two months from commencement of negotiations. One suspects, however, this is more hope than expectation.
The wage talks are already behind schedule, partly owing to the need for the framework agreement to be signed. Nonetheless, two months from commencement of negotiations takes the gold industry to mid-September at best. Throw in a strike or two, and it could be summer before gold companies can factor in wage costs and plan ahead. Who knows what the rand gold price will be in two or three months time?
Analysts, meantime, are paring back average gold price forecasts for 2013. Standard Bank Securities is working on about $1,400 per ounce from a previous forecast of $1,700/oz. The adjustment is R2,700 less per ounce of gold in the kitty of South Africa’s gold companies.
A Chamber of Mines forecast that chills the blood is that at the current trajectory in output and costs, South Africa will produce less than 100 tonnes of gold by 2020 (from about 167 tonnes today) – a tenth of the amount of gold produced in 1970 which was the zenith of South African gold output.
A decline in the South African gold industry is inevitable, but it is being hastened unnecessarily, says the chamber’s senior economist Roger Baxter, especially as the sector accounts for just over 10% of merchanised exports.
The framework signing on Wednesday may look like an emblematic flourish of pen on paper, but it could have meaningful implications for the South African economy.
