Spared more strikes, but threats still loom
There must have been loud cheers and champagne popping in the boardrooms of AngloGold Ashanti, Harmony Gold, and Sibanye Gold as Labour Court Judge André van Niekerk prevented the Association of Mineworkers and Construction Union (Amcu) from rolling out wage strikes at their mines.
The judgment makes permanent an interim order granted by the court in January this year after the Chamber of Mines applied to have any wage-related strikes in the gold sector by Amcu declared unprotected. This is because in September last year a two-year wage agreement was reached between the producers and the unions, comprising of the National Union of Mineworkers, United Association of South Africa (UASA) and Solidarity, which represented a combined 72% of employees at the time while Amcu – though a participant in the collective bargaining process – refused to sign the agreement. Its employee representative share was 17%.
While the ruling is certainly a victory for the gold mining companies, it is also a victory for South Africa’s distressed economy. With the lost employee and company earnings in the platinum belt as a result of the five-month-long strike, it can be said that the economy has lost at least R25bn. If it had that amount in its pocket, Government could have settled outstanding land-restitution claims, supported subsist- ence and smallholder farmers and invested in community work programmes.
In 1970, SA’s gold production was globally dominant, contributing a massive 68% to world production. Fast forward to 2012, and SA fell to the sixth-biggest producer in the world, contributing only 6% towards world production. China is now the world’s largest gold producer, followed by Australia, the USA, Russia and Peru.
This drop can partly be attributed to the fact that our mines are getting depleted and there’s pretty much zilch we can do about that. But there are other contributing factors which include production stoppages, increasing distances from shafts as well as increasing mining costs. In 2012, when the gold industry was hit by wage strikes, it lost almost R5bn in earnings.
According to estimates by the Chamber of Mines, if current trends continue, SA’s gold production would shrink even further. The chamber estimates that by 2020 the country could produce only 90 tons of gold and employ less than 60 000 people.
These are the issues that SA should be smart about if we are to preserve the industry.
Investment Solutions strategist Chris Hart says that while the Labour Court’s decision is good news for the country’s economy, the domino effect of these strikes cannot be ignored. There’s a great possibility that when the gold mineworkers have their chance at demanding higher wages two years down the line, they may start at a level higher than the R12 500 demanded by Amcu because a precedent has been set, he says. “The resulting factor now is that a strategic investment imperative over the next few years is to reduce exposure to SA labour as much as possible.”
Investors may well take their money elsewhere, but one must also remember that the miners themselves are major investors in the domestic economy. They themselves would look at more stable sectors in which to invest their hard-earned money so that they can earn a consistent return.
Another factor is that SA’s gold production has plummeted some 83% over the past decade or so and, as Hart points out, is not as critical a component of the economy as it used to be. Therefore, a harmonious balance between creating a sound and stable mining industry and the need to employ people (and pay them an appropriate wage) must be achieved for the benefit of all.