The crisis unfolding in the mining sector can only be resolved through strong political leadership – of which there has been little so far, say industry experts.
The Fitch rating agency looks set to follow suit in downgrading South Africa's credit rating after both Standard & Poors (S&P) and Moody's scaled back their economic aspirations for the country.
As it stands, South Africa is rated in the lower-medium grade category – merely two sub-grades higher than the non-investment grade speculative, or "junk" category.
S&P's downgrade from BBB-plus takes it one notch below both Moody's Investors Service's Baa1 rating with a negative outlook, as well as Fitch Ratings' BBB-plus rating, also with a negative outlook.
The downgrades led to analysts speculating that South Africa not only has a bleak economic feature to look forward to in the medium term, but the current unrest has caused the country to fall behind as the leading African economy.
"The unrest is exposing a stark reality – South Africa is falling behind, even in Africa," the Wall Street Journal wrote last week.
As wildcat strikes continue at a number of mines, negotiations at the Chamber of Mines on Monday broke down after AngloGold Ashanti, Gold Fields and Harmony, told labour unions they could not afford workers' demands for a R12 500 wage for entry level workers.
'It will only get worse'
It is believed the strikes at those three companies alone could affect 28 000 full-time jobs and 49 000 contractor and service provider jobs. The impact of this could be even more far-reaching, according to Solidarity secretary general Gideon Du Plessis, as every job in the sector creates 1.7 additional jobs.
"We will never employ as many people in the gold mining industry as we do today, from here on it will only get worse," he said.
Elize Strydom, senior executive for employment relations at the Chamber of Mines, said the sector was clearly in crisis. "There is a crisis. I don't think anyone can deny this," she said.
"Some of the operations had been marginal even before strikes but we kept it running because it was at least breaking even but now, with all these losses we've suffered, it may not be viable to save marginal mines," she said.
"This is a very unusual situation but we need to find a solution," she said.
Strydom said the chamber would have liked the government to have taken a stronger stance in trying to resolve the impasse.
"We're not saying they should have done everything and we shouldn't have tried to resolve it ourselves but we certainly would have hoped for [the] government to play a more constructive role," she said.
Last week President Jacob Zuma called a high-level meeting with business, labour and community representatives to deal with the economic downturn and recent challenges.
Zuma's spokesperson Mac Maharaj told the Mail & Guardian the situation in the mining sector raised serious concerns.
"We are aware of this and are taking proactive steps to solve this problem. We need to realise this is a challenge we face in challenging times and we can't discount global factors," he said.
Maharaj said while there was "deep concern" for the current challenges facing the economy, the eurozone's debt crisis and the current global economic downturn must also be taken into account for causing South Africa's economic problems.
"Its about how we get the key stakeholders together to solve this problem separately, but in sync with one another," he added.
"You can't solve this with different partners acting unilaterally. All key stakeholders need to act together and this is why the presidency has called for these meetings."
Maharaj also discounted concerns that unrest in the economy was being exasperated by political tension in the run up to the ANC's elective conference in Mangaung.
"To date I have not heard of anyone putting up political tension as a one of the causes of this. In the same way as in the US, when government action slows slightly during election time, can you blame politics on the overall challenges they face?"
But Peter Major, mining analyst at Cadiz Corporate Solutions, said the usefulness of the stakeholder intervention depended on what was being put on the table.
"If it is a talkshop and he is telling everyone to work together then it is a waste of time," he said, adding all parties should commit to finding genuine solutions and making tangible concessions.
"Government has got to lead by example," he said.
"The macro factors out in the rest of the world are all in our favour. We have a weak, competitive rand, a solid and constant demand for commodities, good to great metal prices and lots of people, companies, institutions and governments who want to invest here. We are shooting ourselves in the foot by not resolving this crisis," he said.
Restoring investor confidence
Peter Leon, a mining specialist at law firm Webber Wentzel, agreed Zuma was right to call for a dialogue but added more was needed to restore investor confidence.
"A meeting itself is not going to achieve anything, but if that meeting concludes that concrete steps need to be taken, that will send a message to the country as well as to international investors," he said.
"People want to see some action. A meeting on its own is not going to achieve anything."
He said resolving the crisis would require a considered and detailed response by the government, labour and business.
He said two issues would have to be dealt with in order to bring stability to the sector – arriving at a reasonable wage settlement and re-looking the social contract of the mining sector.
"Wage settlements have to be reasonable. If they're not reasonable, in the sense they're too costly, it's ultimately self-defeating for the workers because what will ultimately happen is that mining companies will mechanise and retrench."
New social contracts
The mining industry, including government, labour and business, would also need to develop a new social contract for the mining industry.
"All these issues and the accompanying regulatory instruments need to be put on the table – including the Mining Charter – because I don't think they are working," he said.
Meanwhile, mining industry consultant and former trade unionist Gavin Hartford said government should be "deeply concerned".
"Loss of revenue for government is a direct loss for the fiscus. The loss for reputation of our country in the eyes of investors is a lon- term cost. Downgrades are just a reflection of that. One would think this has reached a national priority, and indeed when the president convened talks last week, his office addressed this as a national priority," he said.
"One would hope government is doing everything in its power to bring the parties together, and encouraging the parties to negotiate a resolution," he said.
Hartford added the longer the industrial dispute lasts, the greater the risk of major restructuring and job losses.