SA braces for massive coal strike

About 150 000 South African coal workers seeking 14% wage increases plan to walk off the job from Sunday in a strike that could dent exports and hurt power supplies in Africa’s largest economy.

Hundreds of thousands of union workers have downed tools in recent weeks, or are threatening to do so, seeking raises double or triple the 5% inflation rate in the mid-year bargaining session known locally as “strike season”.

Lesiba Seshoka, spokesperson for the powerful National Union of Mineworkers (NUM), said employers have offered between 7% to 8.5%. No talks were in prospect over what would be one of the largest work stoppages in this strike season.

“The strike will hit hard the stockpiles at Eskom, which are at their lowest ever,” Seshoka told Reuters.

Eskom relies on coal for most of its electricity production and usually has about five to six weeks’ supply available.

The Chamber of Mines is negotiating on behalf of several coal miners, including Anglo Thermal Coal SA, Exxaro, Optimum Coal and Xstrata Coal.

Eskom, battling a power crunch that threatens the energy-intensive mining sector, is facing strike threats from NUM workers at the state utility seeking 16% wage increases.

Employers over the past two years have struck wage deals averaging about 8%, a survey said, with many firms seeing the above-inflation settlements as a necessary cost of doing business in South Africa. They have also slashed jobs over the period to make up for the higher personnel costs.

Strikes typically last a few weeks, slowing production but not causing any major harm to the economy.

Economic worries
Economists have said wage settlements well above inflation hurt the country’s competitiveness and long-term outlook by driving up the costs for a labour force already more expensive than those in other emerging markets and far less efficient.

Other worries for the economy are strikes that stretch into late August, work stoppages that cause Eskom to cut power, or a work stoppage in the platinum sector, with South Africa being the world’ biggest producer of the precious metal used in jewelry and catalytic converters for cars.

Eskom has faced pressure to give in to workers from the African National Congress, which is allied with organised labour and wants to placate its millions of voters.

Eskom plans steep increases in electricity prices to pay for much-needed new power stations, adding to inflationary pressure and taking more money out of middle class paychecks.

A 2008 power crunch forced mines and smelters to shut for days and deterred new mining and manufacturing investment.

In a separate strike about to stretch into its third week, the union that represents about 70 000 fuel, paper and chemical workers said talks with employers are deadlocked. The CEPPWAWU union on Friday lowered its pay demand to a 9.5% increase from 13%. Employers have offered 8%.

South African workers at global diamond mining giant De Beers began a strike on Friday, seeking 15% wage increases. De Beers is offering 7.5% and a one-off payment of R2 500. – Reuters

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