Threat of disinvestment looms large

As wildcat strikes consume the troubled mining sector, protesters and managers appear to be at loggerheads. (Delwyn Verasamy, M&G)

As wildcat strikes consume the troubled mining sector, protesters and managers appear to be at loggerheads. (Delwyn Verasamy, M&G)

As wildcat strikes consume the troubled mining sector, protesters and managers appear to be at loggerheads, with neither willing to budge, but both losing out. Investors, meanwhile, already have one foot removed from the sector.

Attitudes are hardening on both sides of the divide. Management is not prepared to negotiate with illegal strikers and organised labour is siding with the workers, saying there should be new wage agreements, even in cases in which deals have already been agreed.

After a wage settlement three weeks ago at Lonmin's Marikana mine in North West, where protests continued for five weeks and 46 people died, the unrest in the platinum mining sector has persisted at Anglo American's platinum operations in Rustenburg despite the initiation of disciplinary action.
And it appeared to have spread to its Limpopo mine this week when employees presented a list of demands to management. 

No major gold producers have been left unscathed either. Gold Fields and AngloGold Ashanti have ground to halt because of continued protests and thousands of workers at Harmony Gold's Kusasalethu mine also downed tools on Wednesday. At AngloGold Ashanti, the lines have been drawn in the sand as management refuses to negotiate with protesters, whereas Gold Fields obtained an eviction order for hostel dwellers. Following three weeks of unrest, the company is yet to issue a final order for workers to return to work or face dismissal.

A smaller producer, Gold One, on Thursday issued suspension notices to striking employees.

On Wednesday Samancor, in agreement with its recognised unions, decided to send employees at its Western Chrome Mines operation on annual leave following a strike that began last Friday.

Workers at Coal of Africa's Mooiplaats colliery in Mpumalanga have been involved in an ongoing but protected strike since Tuesday last week. 

Another 345 workers employed by Sandton Plant Hire, the opencast contractor at Petmin subsidiary Tendele Coal Mining, went on strike at the Somkhele mine in KwaZulu-Natal and on Monday a security guard was hacked to death, according to the Witness.

Even at Sishen's iron ore mine in the Northern Cape about 300 workers embarked on a strike on Tuesday evening, although most of the mine remains unaffected. Sishen workers received bonuses of up to R500 000 each in 2012.

Anxiety over the situation has been further aggravated by a transport workers strike, which has gained  momentum since last week as union leaders call for petrol pumps and ATMs to run dry until their wage demands are met. And Toyota South Africa confirmed that workers at a plant in Durban also downed tools this week.

One labour analyst, who wished to remain anonymous, said that in all major strikes in 2011 not one worker got more out of them than they lost because of them. On average, workers lose 2% of annual wages a week of strikes. 

The analyst said South Africa had not experienced so many unprotected strikes since the 1970s, but higher wages would not solve the problem. "This is all a way to transfer this away from the issue of the social wage and the unions' inability to look after their members properly."

This week Cosatu leader Zwelinzima Vavi put his weight behind striking workers and their wage demands. He said the trade union federation and the National Union of Mineworkers, which had not been involved in wildcat strikes, would champion better wages for mine workers in all sectors.

Vavi blamed mining bosses for the unrest, in particular Impala Platinum, which has given pay hikes in response to two wildcat strikes this year. 

Ivan Israelstam, chief executive of Labour Law Management Consulting, said: "In general, it's an extremely bad strategy to reward people for an illegal strike. Clearly it can only backfire."

Impala, however, said the tension in the mining sector had complex origins and investigations would play an important role in examining what has led to the present situation.

"Our long-term strategy remains to establish a new multi-union industrial relations dispensation in our operations while moving towards a centralised wage engagement process for the platinum mining industry."

Meanwhile, the industry is at huge risk of increasingly larger disinvestment. It is no secret that gold mining is dwindling in South Africa as mines get deeper and extraction becomes  increasingly more complex and costly. 

BHP Billiton, which accounts for more than 8% of the JSE, has been reducing its investments in South Africa for the past two decades and recently sold its stake in Richards Bay Minerals. 

Simon Brown from JustOneLap, a financial and investment consultancy, said mining giants had been "slowly disinvesting from South Africa for many years. And when you look at BHP Billiton's project pipeline, South Africa doesn't feature at all." 

Brown said revenue from Southern Africa looked good relative to other territories, "but diamond miner De Beers is a strong asset and contributes significantly to its revenue".

"Anglo Platinum is still a strategic asset for Anglo American. I doubt it will sell it. Maybe it will unbundle to shareholders, but I doubt it. There's still a lot of value in those assets. Besides, I don't know who would buy it."

Following the unprotected strikes, AngloGold Ashanti chief executive Mark Cutifani is not the first to announce that his company will have no choice but to prematurely downsize its operations in South Africa. He warned that continued strike action would result in disinvestment, saying that, "as for many others, there is a very clear trade-off between investing in the sustainability of our business and employment".  

Cutifani said these types of wage negotiations would "result in job losses … We cannot afford to increase on the 8% to 10% annual wage increase we've committed to."

AngloGold Ashanti has more than 35% of its operations in South Africa. If it disinvests, not only are the wage demands irrelevant, but thousands of jobs could also be lost. 

"Cutifani and the other experienced mining chief executives know how to manage high cost and risky assets. But they need input from the government, unions and employees to keep these operations going," said Peter Major from Cadiz Corporate Solutions. 

"Most of our deep mines can be kept going for decades longer if they are managed correctly in tandem with the four stakeholders' co-operation: unions, government, employees and management. But complete, absolute buy-in from government and the workers is mandatory." 

Lisa Steyn

Lisa Steyn

Lisa Steyn is a business reporter at the Mail & Guardian. She holds a master's degree in journalism and media studies from Wits University. Her areas of interest range from energy and mining to financial services and telecommunication. When she is not poring over annual reports, Lisa can usually be found pottering about the kitchen. Read more from Lisa Steyn

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