/ 25 July 2003

Gold mine strike threatens foreign investment

The looming strike in the gold mining sector will be short, if it takes place, but it could scare investors away from South Africa, labour relations adviser Andrew Levy said on Friday.

”The impact, internationally, on South African gold shares will be a negative one,” said Levy. ”And there is a feeling that South Africa is strike-prone. But that’s not true.”

The perception that foreign investors would have as a result of the strike would not be good because gold shares of South African firms were the most traded internationally.

Econometrix senior economist Tony Twine said the gold mining sector was no longer the dominant export sector it was 25 years ago.

”Last year, gold exports amounted to R42-billion, but it is no longer the dominant South African export sector which it was 25 years ago,” Twine said.

He said the money reflected just less than 10% of gold exports in 2002, and the mining sector as a whole contributed less than eight percent of the total economic output.

”So, if a portion of the gold sector gets into trouble, it will not have a major effect on the South African economy in a direct sense.”

Twine agreed with Levy that the strike could create suspicion among foreign investors who already view the country’s labour legislation as unfriendly to capital.

He said: ”Labour unrest does not enhance South Africa’s foreign image.

”Domestic and foreign investors are somewhat suspicious of the labour legislation environment in South Africa which some perceive to give workers more rights than their employers.

”In such an environment, a propensity to strike appears to leave the other stakeholders at a disadvantage which frightens away investment,” he said.

A total of 100 000 mineworkers face the prospect of a strike from Sunday due to an impasse on pay rise talks. This would be the first time in 16 years mineworkers from the gold industry go on strike.

The strike is targeted at big mining firms like AngloGold, Gold Fields and Harmony. Two coal mines — Ingwe and Kuyasa — were also to be targeted, but were taken off the list after a settlement was reached.

It was reported on Thursday that mineworkers are demanding a ”double-digit” — 10% — wage increase across the board.

But mining bosses say they cannot go any higher than the average nine percent currently on the table.

It said the union is also demanding that a grading system for workers be reviewed, pushing them to higher grades, which would improve their salaries.

Chamber of Mines chief negotiator Frans Baker said mining firms could lose about R125-million on production a day if the planned strike went ahead.

Total wage losses could be R50-million a day and the country would lose R125-million a day in exports, Baker said.

He said on Thursday that the mineworkers’ wage demands were unreasonable, and impossible for gold mines to meet.

”The problem is the National Union of Mineworkers’ demands are unreasonable, and it is demanding a nearly 30% wage increase.

”If the union does not compromise, they will strike. We cannot afford the union’s demands,” Baker said.

On Friday, Baker put out a statement saying the chamber ”would like to set the record straight” in the light of ”contradictory media statements about the wage offers”.

He said employers offered wage increases ranging between nine percent, and 12% for workers at the lower categories.

And the higher increase was aimed at achieving a minimum wage of R2 000, he said.

The mine bosses further offered an effective pay rise of between 16% and 28% for machine or rock drill operators.

Other workers were offered a wage increment of between nine percent and 10%. An offer was made to upgrade machine or rock drill operators to Grade 5.

This would which will result in them receiving a pay hike of between 16% and 28%

Baker said the National Union of Mineworkers demanded a 10 percent pay increase across the board, and an upliftment of all operators to Grade 6 irrespective of the outcome of objective job grading exercises.

”This demand amounts to an increase of 44% in the wages of the employees involved, and a 10% increase in the total Wage Bill,” Baker said.

Standard Bank economist Monica Ambrossi urged union leaders and mine bosses to keep in mind the inflation targets South Africa has set for itself.

”They should try and balance the need to compensate employees for the increasing prices with the need to insure the attainment of the country’s inflation,” she said. – Sapa