[miningmx.com] — Impala Platinum’s wage negotiators were
served with a demand by the National Union of Mineworkers
(NUM) for a 15 percent wage increase today, while their
counterparts at Lonmin came within a hair’s breadth of
reaching an agreement with the same union.
Details of Lonmin’s offer have not yet been made public. The deal, which could last until 2010, has the NUM close to capitulation and the blue-collar Solidarity union
is positively gushing. The offer is thought to involve a link to inflation, a moratorium on retrenchments and profit share of some description. Whatever it is, it looks like it could be good enough for the NUM, which represents about
two-thirds of Lonmin’s 25,000-strong workforce.
If a deal is signed, Lonmin could neatly sidestep one of
the most volatile rounds of wage talks for some time and
avoid the damaging spectre of a company-wide strike. Mining
in South Africa comes with more than enough bad news for
investors – uncertainty around implementation of mining
laws and royalties, among others – without bringing
labour unrest into the equation.
Anglo Platinum and Impala, however, look almost certain to
repeat October’s wage strike. One analyst calls the demand on Impala “almost as ridiculous as the 20 percent demand on gold,” a sentiment the company’s managers are likely to agree with. Anglo Platinum’s 2.5 percent
offer, in the face of a 12 percent demand, has only raised
labour’s ire. Impala will study Lonmin’s deal closely
before showing its hand.
This year’s negotiations come against the backdrop of
the most combative round of wage talks South Africa has
seen for at least two decades. Unchecked consumer spending
is sending workers a signal of a booming economy, stoked by
record-low interest rates and relatively low inflation of
3.8 percent in May.
The reality for mining companies is quite different. Price
increases of everything from power and steel to water and
transport have outstripped inflation, while the rand’s
gains have undone much of the good of surging metal prices.
The most liberal executives argue that they simply cannot
bear an above inflation wage hike.
The NUM, mandated to remedy the economic disparities and
poor working conditions visited on its members over more
than a century of white rule in South Africa, are ignoring
economic realities for now. Its leadership took a
strong-arm approach to wage talks at its Central Committee
meeting last month.
NUM president Senzeni Zokwana, addressing a hall full of
red-clad union shop-stewards, asked why companies are
retrenching staff while the dollar price of gold is above
$420 an ounce. Inflation and the rand-price of the metal – which has slumped since the beginning of 2002 – didn’t feature in his reckoning, nor in that of the
crowd. They were being told what they wanted to hear: management is unreasonable and retrenchments are capricious
A general strike called by the Congress of South African
Trade Unions for Monday, June 27, will be emblematic of
labour’s commitment to standing fast on its wage and
related demands in the face of wholesale job losses. The
federation, fully supported by its member unions, including
the NUM, has vowed to close South Africa’s major economic
centres for the day to protest job losses. The logic may
seem strange to some, but it’s a feat of economic suicide
Cosatu says it will repeat until the problem of
rand-related job losses goes away.
There’s more than enough evidence to suggest it will
follow through with its threat and that mining companies
will face similarly steadfast opposition to low wage
increases. Harmony was forced to tough out a three-week
strike at its loss-making Free State operations earlier
this year as workers protested living out allowances for
those living outside mine hostels, not usually a
deal-breaker. Workers at Samancor Chrome, acquired in March
by privately-held Kermas Group, downed tools on June 2 in
protest against job-grading, another issue that rarely
leads to strike action.
Privately, senior mining executives admit that a series of
strikes is almost certain as they dig their heels in over
what they see as unreasonable wage demands. Many companies
have ordered stockpiling of ore at surface to make sure
mills keep turning if blasting comes to a halt.
While Impala has some room to manoeuvre in reaching a
settlement, Anglo Platinum will have to tow the Anglo
American line – as AngloGold, Kumba and De Beers are
likely to have to do in their respective wage talks – in
grinding out the lowest possible settlement. International
investors, already weary of Anglo’s high exposure to
South Africa relative to its peers and its underperforming
precious metal-heavy product mix, will be watching closely
for any signs of weakness.
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