Strike action a concern
Sibanye Gold has been one of the bestperforming stocks on the JSE over the past 12 months, with a higher rand gold price driving its share price up 106%. At the end of March, the JSE’s Gold Mining Index was up 92% quarter-on-quarter, compared with a 3.1% rise in the All Share Index over the same period.
Yet plans by the Association of Mineworkers and Construction Union (Amcu) to down tools over wages at Sibanye on 6 April have weighed on the share price, with the announcement of the strike sending shares down 2.3% on 4 April. Amcu is demanding R12 500 a month for its members, echoing its demands that led to a recordlong strike in the platinum sector in 2014 that lasted more than five months.
Sibanye, which reached a wage agreement with three other unions at its operations in October 2015, described Amcu’s decision to strike as “unfortunate” and that it would not accede to Amcu’s demands. (As was going to press on 6 April, Sibanye announced that the strike has been suspended pending further negotiations.)
The union also expressed unhappiness about the lower pay in the gold mining sector compared with what similar workers are paid in the platinum and coal sectors. Sibanye is hoping to expand its footprint into coal and platinum, including through the purchase of Amplats’ Rustenburg mines. How to trade it: Current consolidation in the share price, which commenced at the beginning of March, is a sign of an exhausted uptrend, which could result in a near- to short-term retraction. Although Sibanye has reassured stakeholders that it’s developed robust plans to mitigate the potential impact of strike action, and plans to implement them accordingly, investors may aggressively offload the share. Sell below 5 150c/share as the share could depreciate back to 3 945c/share, should the strike drag on. A fair stop-loss must be maintained.