Gold Mining Labor Negotiations In South Africa Off To Rocky Start

May 10th, 2013 by


South African unions representing workers in the nation’s gold mines are meeting with Chamber of Mines officials to craft a position in labor slated for later this month with the seven operators of gold mines in the country. Some workers are demanding an 18% pay raise, at a time of declining gold prices and soaring electricity costs for the sector.

Gold production in South Africa peaked at 1,000 tons in 1970, and has declined since. Last year, only 167 tons of gold was mined, as numerous labor strikes crippled the industry. Remaing gold deposits are far underground, making it very expensive and labor intensive to recover. Fully 50% of the total cost for gold miners in South Africa is labor costs.  A spokesman for the National Union of Mineworkers (NUM) is reported to have declared that if the companies do not grant an 18% pay raise, “then all hell will break loose.”

The CEO of Gold Fields said that past wage increases for mineworkers have been greater than the inflation rate, during a period where productivity has dropped. He said that any further pay increases had to be linked to increased productivity. The CEO of Sibanye Gold has remarked that his company has taken measures to weather any future strikes, stating that he is “confident and prepared for strikes lasting in excess of three months.”

Negotiations between unions and mining companies have traditionally been done collectively, where the unions and all companies agree to the same conditions. However, activist union the Association of Mineworkers and Construction Union (Amcu) has declared its intention to construct separate agreements with each platinum mining company, and may take the same tack with gold producers. Amcu has been competing with NUM for members, and the rivalry has grown bloody at times, with attacks on each other’s rallies. This has led NUM to become more confrontational with mining companies in an effort to retain membership.