Strike ac­tion a con­cern

Finweek English Edition - - MARKETPLACE - Ed­i­to­rial@fin­

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.

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