Warning: Chaos looms for mining companies as AMCU gets set to take on government

EDINBURGH — Disruption looms for mining companies after trade union AMCU got the news that it may have to deregister. AMCU is a trade union that has been at loggerheads with rival trade union NUM, which is closely linked to President Cyril Ramaphosa – first general secretary of NUM when it was founded in 1982. NUM is also part of Cosatu, an alliance of trade unions which expressly supports the ANC though NUM has recently been critical of the government. The Economic Freedom Fighters, the political party that supports Venezuela-style economic policies, has said it believes the government’s move to deregister the 200,000 member-strong AMCU is aimed at strengthening NUM. There has been fighting talk from AMCU leader Joseph Mathunjwa, who has hinted of strike action by AMCU. Mining company bosses and analysts widely agree that deregistering AMCU would spark chaos in the mining industry. – Jackie Cameron

By Paul Burkhardt and Felix Njini

(Bloomberg) – One of the most polarising figures in South African mining, union leader Joseph Mathunjwa, has never hesitated to go head-to-head with powerful CEOs. Now he may have to face down the government.

Mathunjwa’s Association of Mineworkers and Construction Union has upended labour relations in the local mining sector, leading long and crippling strikes as it seized members from a politically connected rival. A relative upstart, the militant union became a household name after a 2012 dispute at Lonmin Plc that culminated in police massacring 34 people at a protest.

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AMCU may now face its biggest test yet, after a government official threatened to deregister the union for failing to hold a regular congress and leadership polls. Mathunjwa has promised to fight the move, which could sharply curb the group’s finances and influence, and insisted it is compliant with regulations.

If a weakened AMCU resulted in fewer prolonged strikes at South African mines, it would be welcome news for producers already struggling with high costs and ageing mines. The union was on the back foot even before the deregistration news, after calling off a five-month strike at Sibanye Gold Ltd.’s gold mines with little to show for it.

For now, though, a dispute with the Labour Department will probably mean more operational disruptions if AMCU members protest against the move to deregister the union. It also ratchets up uncertainty just as the world’s biggest platinum producers are getting ready to negotiate new wage agreements with local labour groups.

“Companies have to decide whether to take AMCU seriously,” said Ross Harvey, a mining analyst at the South African Institute of International Affairs. “If they don’t, then AMCU could unleash chaos and the mines may have to close shafts.”

AMCU is not going down without a fight. While it’s prepared to meet the labour registrar this week, the union has also referred the matter to its legal team. It has already told the official it will hold its congress in September, Mathunjwa said, blaming the latest delay on the recent strike and pointing to an unnamed “political agenda” behind the deregistration move.

“Workers are not stupid,’’ he said. “They wanted a genuine union that can fight for their rights. They wanted a genuine union that can change their lives and make a difference in their lives.’’

AMCU was formally registered as a union in 2001 but rose to prominence after a strike by rock drillers at Lonmin Plc’s Marikana operations in 2012. One of Mathunjwa’s rallying cries has been that the National Union of Mineworkers – the group co-founded by President Cyril Ramaphosa – is too close to both mining companies and South African authorities.

In 2013, AMCU dethroned the NUM as the biggest labour group at the country’s platinum mines and a year later led a five-month strike, the longest ever in the sector.

Marked by violence

The relationship between the two unions has been marked by regular violence, with each blaming the other’s members for shootings and murders. Most recently, at least nine people died during the strike at Sibanye Gold Ltd. that was called off earlier this month.

If AMCU were deregistered, mining companies could move to cancel collective-bargaining arrangements and potentially withdraw its rights to collect union dues, said Brett Abraham, a lawyer at Webber Wentzel specialising in employment law. It wouldn’t prevent AMCU members from continuing to organise collectively and embark on legal strikes, he said.

The union has 60 days to make submissions to Registrar of Labour Relations Lehlohonolo Molefe on why it shouldn’t be deregistered.

It’s unlikely that the authorities will go as far as deregistration, said Albert De Beer, a labour consultant. Still, it’s clear that the union has been weakened by recent setbacks, he said.

“It would be a disaster for the platinum industry if AMCU is deregistered,” said Bernard Swanepoel, a veteran of South African mining who now sits on Impala Platinum Holdings Ltd.’s board. “In my opinion, a ‘cleaned-up’ and well-governed AMCU is the most likely – and best – outcome.”