Ed Stoddard: SA’s big platinum strike holds lessons and omens for gold
By Ed Stoddard
With wage agreements expiring in June, the omens are bad: a lethal rivalry between unions and the precedent of a huge wage settlement in the platinum sector.
Mining executives interviewed at an industry conference this week say they have drawn lessons from platinum's five-month strike last year.
A heavy debt burden among low-wage workers has been cited as a key reason behind a rise of labour militancy.
"We have engaged a legal firm and reduced the number of garnishee orders on our employees by 10 to 15 percent," Venkat said.
Harmony Gold CEO Graham Briggs said the industry was educating workers to improve their financial literacy.
Platinum executives have also drawn lessons in an effort to maintain stability in their sector, which was hit by periodic wildcat strikes ahead of last year's big stoppage.
Platinum producer Lonmin's chief executive Ben Magara said the company had started holding "quarterly meetings with our unions to make sure we understand their concerns and they understand the circumstances of the business."
TURF WAR
While fighting for workers rights, unions are engaged in a bitter turf war. The once dominant National Union of Mineworkers (NUM) has been hit by incursions by the Association of Mineworkers and Construction Union (AMCU), which has poached tens of thousands of NUM members on the platinum belt and led to battles in which dozens of miners have been killed.
NUM is battling to maintain its majority status in gold. According to industry figures, at the end of December 2014, NUM claimed 57 percent of South African gold miners who are unionised. AMCU has gone from virtually no membership in gold three years ago to 25 percent.
Any deal reached with the majority union will be imposed on others and so AMCU has incentive to dislodge its rival. Its officials have said they are recruiting aggressively in gold.
Meanwhile Harmony's Briggs said in a presentation that the industry's wage costs have more than doubled in the past decade, even as South Africa's gold industry has maintained a relentless decline from almost 80 percent of global production a few decades ago to 13 percent in 2004 and 5.3 percent in 2013.
Inflation is currently 5.3 percent and both unions will almost certainly go for much higher, especially after the platinum settlement resulted in hikes of around 20 percent.
Power and other costs have soared while spot gold prices, which are fetching around $1,234 an ounce, are down over a third from the record $1,920.30 an ounce in September 2011.
Times are tough for the industry. Harmony's margins are under strain and on Monday it reported a headline loss of 496 million rand ($43 million) in the three months to Dec. 31, 2014.
"These talks will be quite critical for the industry," said AngloGold's Venkat.
Mining company and commodity trader Glencore said on Wednesday it would divest its 23.9 percent stake in Lonmin to its shareholders as platinum is not one of the commodities it trades.