No signs of Sibanye or Amcu backing down
It’s hard to avoid the conclusion that the Association of Mineworkers and Construction Union (Amcu) has scored a tragic own goal with its three-month strike at SibanyeStillwater’s gold mines.
Sibanye says that it is starting a formal restructuring process that could entail the loss of up to 6,670 jobs at five gold mines at Beatrix in the Free State and at Driefontein in Gauteng because they were unprofitable during 2018.
Sibanye says the restructuring is not related to the strike that Amcu started on November 21 to demand a R1,000 per month wage increase, despite a wage settlement reached with three other unions for R700 a month in the first two years of a three-year wage deal and R825 a month in the third year.
The quantum of wages lost by about 14,000 employees who remain on strike, roughly half the gold workforce, means that even if Sibanye relented, they would take years to recoup the salaries they’ve lost so far.
The strike shows no signs of ending, with Sibanye CEO Neal Froneman adamant there will be no change to the wage deal in place. Amcu president Joseph Mathunjwa is equally steadfast in not backing down.
Running a restructuring process entailing so many jobs while dealing with a deadlock in the strike promises to be difficult. It will need cool heads and constructive talks to save those jobs, but this is unlikely given the nastiness prevalent in the strike, in which three people have been killed, houses torched in acts of intimidation, and other acts of violence.
There’s been a distressingly muted response from JSElisted shares to the recent news of a gas find in deep water, 175km south of Mossel Bay.
It is, of course, early days and so far we’ve only been told the big picture stuff: it may generate the equivalent of about 1-billion barrels of oil but is in an area that is extremely difficult to work.
There is some talk that prevailing currents make it even more challenging than the remarkably challenging conditions in the North Sea and that it may only be possible to access it during a few months of the year. Also, it seems the find, to date, is below initial expectations. But it is still early days and SA really is desperate for any good news.
It’s evident the news so far has not been sufficiently encouraging to stop the slide in JSE-listed construction shares not even in former construction share Murray & Roberts (M&R), which now refers to itself as a “global engineering group’.
NATURAL RESOURCES
M&R, which is in the middle of a drawn-out control tussle between German-based Aton and the M&R board, would seem to be ideally placed to benefit from a gas/oil find off the SA coast.
As CEO Henry Laas told investors at a results presentation in 2018, the group is now a multinational engineering and construction group focused on the natural resources sectors. He referred to huge opportunities in the oil and gas market, although conditions “remain challenging”.
And yet the M&R share price is down 5% since the Total announcement. At R13.82, it is also significantly below the R17 offered by Aton, which currently holds almost 44% of M&R. The offer expires on March 31 but presumably could be extended.
The weakness in the M&R share price suggests investors are not as excited about the “game-changing” discovery as the media are.