Hotazel mine strike a warning of job fears at South32

LABOUR hassles in South Africa are proving a headache for BHP Billiton ahead of a crucial vote next month on its plan to split assets off into a new company, South32.

About 800 angry workers at Hotazel Manganese Mines in the Northern Cape went on an unprotected strike on March 27 over what they claim is BHP Billiton’s failure to pay them what they are owed in an employee share scheme dating back to 2007.

The dispute was resolved only last Tuesday after the company sat down with the miners, who were represented by the National Union of Mineworkers (NUM).

In the background, workers are clearly jittery about the demerger and whether any jobs will be cut once BHP Billiton spins off its aluminium, coal, nickel, manganese, silver, lead and zinc assets into South32. Some workers fear there may be a repeat of what happened when BHP Billiton sold Optimum Coal mines to Glencore and jobs were lost.

BHP Billiton spokeswoman Lulu Letlape said the company had spoken extensively to the unions to reassure them jobs would not be lost.

“We have used every avenue . . . to assure workers there will be no job losses. What happened at Optimum Coal is completely different . . . with Optimum it was a new company taking over, here it is still the same umbrella,” Letlape said.

South32 will house mostly Australian and South African assets, which means the new company will have a greater exposure to the volatile local labour environment.

Its circular to shareholders raised red flags about the labour situation.

“The South32 businesses may not be able to satisfactorily renegotiate collective labour agreements when they expire, and may face higher wages and changes in benefits,” the circular read.

“In addition, existing labour agreements may not prevent strikes or work stoppages in future, and any strike or other work stoppage could have an adverse effect on the operations and financial results.”

Letlape said the company was simply opening up to investors on its position.

“We are not saying labour is a problem that we are failing to deal with. But [it] is one of the challenges that we are on top of,” she said.

Other dynamics are at play in Northern Cape manganese mines, however, including a power struggle between the Association of Mineworkers and Construction Union and NUM, which could create a lethal cocktail.

Investors in the JSE shares of BHP Billiton will vote on the split on May 9, in terms of which shareholders will get one share in South32 for each BHP Billiton share held.