The two-week strike by 21 000 National Union of Mineworkers (NUM) members at most of Harmony Gold’s Free State mines will add to the group’s losses for the current June quarter, analysts said on Wednesday.
The Target mine was excluded from the strike.
Harmony has already reported six consecutive quarterly losses and is expected to report losses for the March and June quarters.
The strike, which would have lasted eight working days by Wednesday evening, cost the company about 45 000 troy ounces of gold production, equating to $18-million in lost revenue.
In the December quarter, Harmony produced 20 653kg of gold, or about 664 015 oz, from its South African operations.
“The bulk of the impact of the strike is likely to be seen in Harmony’s June quarter result. Quite a few of the shafts that have been hit by the strike are loss-making. The strike just makes things worse,” a Johannesburg analyst said.
“The strike makes things more difficult and will add to the costs of Harmony’s restructuring and its hostile bid for Gold Fields. Wages will also go up on July 1 and that will also add to Harmony’s costs. Unless the rand gold price increases, things are going to be tough for Harmony,” he added.
“A number of Harmony’s high-cost operations will have to close and Harmony will be hit by restructuring costs into its 2006 financial year [which ends in June 2006],” the analyst said.
The NUM began the strike from the evening shift on March 23. If the union’s members accept an agreement hammered out on Tuesday evening, then they will return to work from the evening shift on Wednesday.
However, if the NUM members reject the framework agreement, the strike will continue, NUM spokesperson Moferefere Lekorotsoana said.
At 11.30am on Wednesday, Harmony’s shares on the JSE Securities Exchange were quoted at R48,85, up 2,8% or R1,35 from its previous close.
Following protracted negotiations, the two parties reached an agreement in principle in the early hours of Wednesday morning on most of the issues in dispute, and the agreement will be signed later on Wednesday if NUM members concur.
NUM negotiators were meeting with NUM striking members on Wednesday morning, and final feedback was likely to be received later on Wednesday, with a meeting scheduled between the NUM and Harmony representatives from noon, Lekorotsoana said.
The main issues in dispute were: replacement of deceased employees, short payment, racism, housing, health care, centralisation of adult basic education and training, the training centre, and the mining charter.
However, there was no agreement on the replacement of medically incapacitated workers, which is not part of the framework of replacement.
“The replacement of workers by their next-of-kin is only limited to those who die. There are disparities within Harmony regarding the replacement of medically incapacitated workers, and NUM members want a common replacement agreement,” Lekorotsoana said.
The NUM is set to start a secondary strike at the rest of Harmony’s operations in South Africa from April 12. If no agreement is reached on Wednesday, the secondary strike will proceed, Lekorotsoana said.
Regarding the Section 189 notices issued at Welkom 1, St Helena, Nyala, Masimong 4 and Bambanani gold mine near Welkom, which affect a total of 4 914 miners, Lekorotsoana said there has been little discussion between the NUM and Harmony representatives regarding restructuring notices.
Harmony will release its March quarter results on April 25. — I-Net Bridge