(Reuters) – South African gold miners plan to strike for higher pay from Tuesday, inflicting more damage on an industry that has produced a third of the bullion ever pulled from the earth but is now in rapid decline.
The National Union of Mineworkers (NUM), which represents almost two thirds of the country’s 120,000 goldmine workers, served the mining firms notice of the strike starting from Tuesday’s night shift, the companies said.
Negotiations broke down last week, with the unions and companies still poles apart over pay. The Chamber of Mines, which negotiates on behalf of the companies, said it made a final offer to increase basic wages by 6 to 6.5 percent.
The NUM is seeking 60 percent and rival union AMCU wants as much as 150 percent. The companies say those demands are unrealistic, given rising costs and falling bullion prices.
In a sign of the industry’s frustration over the deepening crisis, Chamber of Mines president Mark Cutifani choked back tears on Thursday as he made an emotional appeal for an end to the violence and rounded on “thugs and murderers” he accused of stoking the unrest.
The unions seem determined to end what they see as a culture of low pay dating back to the apartheid era when impoverished black miners migrated to the industry’s heartlands for jobs to feed their families back home.
White rule ended in 1994 and the unions say miners who risk their health toiling far below ground are due a bigger share of the spoils from a multi-billion-dollar industry.
But capital may have the edge over labor.
The companies have abundant cash and other resources, while most mine workers must feed several dependants and cannot go long without pay.
Wildcat strikes have shaken the industry since early last year, coupled with outbreaks of violence linked to a turf war between the NUM and the hardline Association of Mineworkers and Construction Union (AMCU).
The mining crisis has triggered damaging credit rating downgrades for Africa’s largest economy and criticism of President Jacob Zuma and the ruling African National Congress over their handling of the violence that left dozens dead.
This time around, the miners will down tools legally, offering some solace to nervous investors.
Zuma and the ANC are keen to keep a lid on the labor unrest and potential job losses ahead of elections in 2014.
“The employers will continue to make plans in anticipation of strike action, to ensure the continuation of essential services, and to ensure the safety and security of employees and assets,” the mining companies said in a statement.
“The employers remain open to discussions with all unions and urge them to engage in good faith to reach an outcome that is acceptable to all,” it said.
Affected companies include South Africa’s main producers, AngloGold Ashanti, Gold Fields, Harmony Gold, Sibanye, and some smaller operations.
SUNSET INDUSTRY
Wage talks have also broken down with AMCU and other unions, but they have not yet signaled an intention to strike.
A gold industry shutdown could cost South Africa more than $35 million a day in lost output, according to calculations based on the spot gold price and a Chamber of Mines estimate that the sector would stop producing about 760 kg a day.
This will put pressure on a struggling economy already weighed down by ongoing strikes in auto manufacturing, construction and aviation services, and facing potential strikes by textile workers and petrol station employees.
Since the start of 2011, Johannesburg’s mining index has fallen 18 percent against a gain of 32 percent in the all-share index, which has scaled a series of record highs this year.
South Africa’s gold industry, which once accounted for almost 80 percent of global bullion output, is in a state of steep decline and the country now produces just 6 percent of the world total.
It has been laid low by a combination of geological and economic setbacks. After more than a century of mining, the remaining ore lies deeper underground and is more costly and dangerous to extract. Labor and power costs per ounce of gold mined have leapt.
Market gold prices have not helped. Spot gold is now about 27 percent below its historic peak of over $1,920 an ounce scaled two years ago.
(Editing by Stephen Nisbet and Tom Pfeiffer)