South Africa’s biggest union, National Union of Mineworkers (NUM), said its members planned to strike at Eskom next week after rejecting a wage offer, raising the threat of electricity disruptions in Africa’s largest economy.
The possibility of a power shutdown helped drive up prices of platinum and palladium due to fears output could be hit, and deepened concerns about damage to the South African economy, also a major gold supplier.
Eskom generates 95% of South Africa’s electricity and 45% of Africa’s. Blackouts early last year temporarily crippled mine output.
The NUM, which has 16 000 members at Eskom, said a strike was inevitable and could start on Monday or Tuesday.
”We don’t see how a strike can be avoided … Our plan is to start mass action as early as next week,” NUM spokesperson Lesiba Seshoka said.
Seshoka later said Eskom workers would also march to the utility’s headquarters on Thursday to demand that CEO Jacob Maroga resign.
Metalworkers at Eskom also plan to strike next week if wage demands are not met, a union spokesperson said. Smaller union Solidarity said its members at Eskom also rejected the pay offer.
Another strike could hurt investor sentiment after a recent wave of industrial action in South Africa that led to above-inflation settlements.
A power strike would be a challenge to President Jacob Zuma’s authority as he tries to lead South Africa through its first recession in 17 years and defuse anger in poor townships.
Brinkmanship
Eskom said the chances of a settlement in the talks had improved, however. Unions are demanding a 14% increase and the utility is offering 8% — above the current annual inflation rate of 6,9%.
”Both parties have moved and we believe our chances to reach a settlement are much closer,” Eskom spokesperson Fani Zulu said.
Credit Suisse Standard Securities gold analyst David Davis said: ”Obviously a prolonged strike will certainly affect mining companies quite significantly, but at the moment I think the unions are involved in brinkmanship over the wage negotiations.
”I would certainly wait and see.”
Mining analysts said in the event of a strike, power stations would continue generating electricity to allow mines and other industries to continue their operations, but may be affected when maintenance issues arose.
Under South African labour law, Eskom is classified as an essential service, prohibiting a large majority of its staff from striking. But the union has said it could defy the law because of the urgency of its members’ demands.
A spokesperson for AngloGold Ashanti, the world’s third-biggest gold producer, said the company would meet Eskom to discuss the threatened strike.
”We have sufficient emergency power to safely evacuate our workers from underground mines in case of power outages,” AngloGold spokesperson Allan Fine said.
Gold Fields, the world’s number four gold producer, also said it had back -up power to evacuate mine workers.
A week-long municipal workers’ strike disrupted public services before workers settled for a wage increase almost double inflation last week, raising economists’ concerns about a inflationary effects.
On another economic front, Zuma said his government would offer support to struggling companies in the auto industry, one of South Africa’s biggest manufacturing sectors, which has been in decline for over 2 years, knocked by a domestic recession.– Reuters