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Talks to end South Africa gold strike hit deadlock  Join our daily free Newsletter

MENAFN - AFP - 15/10/2012

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(MENAFN - AFP) Efforts to end a rash of gold mine strikes that have strangled South African production ran into deadlock on Monday with no further talks planned, leaving tens of thousands of workers facing the threat of dismissal.

Mine owners and union officials reported that last-gasp talks to end weeks of rolling wildcat strikes had failed, after rank-and-file workers rejected a wage deal reached by negotiators and no further proposal was forthcoming.

After the talks broke down, employer group the Chamber of Mines declared that "it is not in a position to make any further proposals," leaving it up to individual companies to find their own way out of a crisis that has seen tens of thousands of workers illegally down tools.

"One of the avenues could be the dismissal of strikers," chamber official Elize Strydom said. Another route, she said, was "retrenchment" or a radical restructuring of mine operations.

"Some companies -- marginal companies in particular -- have been closed and not producing for so long that they now probably need to be closed."

Tens of thousands of gold workers have been on strike for more than a month in South Africa's mines, most of them located near the commercial hub of Johannesburg.

The often violent strikes over pay have strangled production in the country, which accounts for around seven percent of global output.

Union leaders -- who have seen their power seriously eroded by the crisis -- warned that mass dismissals could inflame the situation further.

The National Union of Mineworkers warned owners "that dismissals would not be a solution to the current challenges facing the industry and that it would only serve to fuel emotions that are already high and inflame the situation further."

Workers indicated last week that they could not support the wage deal saying it was not up to their demand for salaries of roughly 12,500 rand (1,430) a month.

The latest offer would have seen monthly wages and bonuses go up to between 7,000 and 10,000 rand.

With South Africa already having one of the world's highest costs of extraction, mine owners argue that type of hike is unworkable and that the current agreements should be respected.

Workers, many of whom accuse their union representatives of being in league with mine owners, argue they deserve better conditions and a bigger slice of what is often a highly profitable business.

There are growing fears about the impact the labour unrest will have on the South African economy, the biggest and most advanced on the continent.

The mining industry as a whole accounts directly and indirectly for 19 percent of economic output and employs 1.3 million people in the mines and related sectors.

Already the platinum sector, which has suffered a wave of strikes since August, saw a 2.6 percent drop in output that month. The toll for the gold sector and for the broader economy has yet to be quantified.

Economic growth has already been forecast to reach 2.6 percent this year, a mediocre rate of growth for an emerging market economy.

But on Friday, Standard and Poor's slashed South Africa's sovereign debt rating by one notch from BBB to BBB, warning the strikes were taking their toll.

"In our view, the strikes in South Africa's mining sector will likely feed into the political debate in the run-up to the 2014 elections, which may increase uncertainties related to the African National Congress' future policy framework," the agency said.

Amid the deepening malaise President Jacob Zuma, who has so far been reluctant to get involved, looks set to accept a bigger role.

In a statement the presidency said a meeting of stakeholders on Wednesday would result in "a joint response that will enable the country to deal with the current global economic downturn and also the recent economic challenges inside the country including strikes".

That drive is likely to include an undertaking from business leaders to limit pay for the next twelve months as "a gesture towards social cohesion," according to officials at Business Unity South Africa, a trade forum.

Meanwhile strikes spread on Monday, with 8,500 workers at Gold Fields KDC East operation joining a strike at sister facilities, causing a complete suspension of production.

The company said 19,500 people out of a total workforce of about 26,700 were now striking at the KDC east and west sites.

AngloGold Ashanti, which has some 24,000 workers at all of its six mines in South Africa staying away from work, recently warned it will soon become difficult to convince investors to put their capital into the country.


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