Sibanye’s Neal Froneman draws a line in the sand
Standoff with Amcu a chance to ‘reset’ labour relationships
● Neal Froneman, the CEO of gold and platinum miner Sibanye-Stillwater, says the outcome of its three-month standoff with the Association of Mineworkers and Construction Union (Amcu) at its three gold mines will have significant consequences for the local mining industry.
“Caving in to their demands would be catastrophic in the bigger picture,” he says.
Speaking to Business Times shortly after minister of mines Gwede Mantashe told the mining indaba in Cape Town that SA was a safe venue for mining investments, Froneman says that the Labour Relations Act gives the lie to this.
It gives unions like Amcu that use violence and intimidation an unfair advantage over companies like Sibanye. The current strike on its gold mines is both the time and the place to “reset relationships in a more balanced manner” for the good of the industry, he says.
Amcu embarked on a no-work-no-pay strike at Sibanye’s three gold mines in November, demanding a R1,000-a-month increase. The other unions have agreed to R700 a month for the first two years of the three-year wage deal and R825 a month in the third.
Amcu has used violence and intimidation to enforce the strike, and Amcu president Joseph Mathunjwa has threatened to spread it to Sibanye’s platinum mines around Rustenburg.
Froneman says Amcu’s real agenda is to prevent Sibanye’s planned takeover of Lonmin later this year. The union has appealed against the Competition Tribunal’s approval of the takeover.
He says the Amcu strike is about more than a wage increase.
“It’s about one union trying to bully and undermine the others.”
Amcu doesn’t want Sibanye at Lonmin “because we’re clearly a company that takes firm views and firm positions and we’re not going to be bullied and intimidated by any stakeholder”.
What happens will drastically affect platinum wage negotiations later this year and its chances ofturning around the stricken platinum miner..
“If we take a weak position on the gold division strike can you imagine how we’ll be abused when we start having to do some difficult things in integrating Lonmin?”
He says “some people” believe Sibanye should at least meet Amcu halfway, but “this would be disastrous”, he says.
It’s time to teach Amcu “that when we say no it’s no”.
He says one of the biggest disincentives to investment in the industry is the Labour Relations Act, which puts companies at the mercy of the likes of Amcu.
“The environment is totally skewed towards unions and particularly a union like Amcu, which uses massive intimidation.”
Now is the time to “reset” relationships with unions in a more balanced manner.
“We actually need to establish the right relationships. These are not always friendly relationships, they’re credible relationships.
“That’s why we very consciously have taken a strong position to level the playing field by the time we get to Lonmin.”
If Sibanye loses the fight with Amcu on its gold mines, “I’m not sure we could then take Lonmin over in a way in which we could achieve what we need to achieve”.
Amcu says there’ll be massive job losses if Sibanye is allowed to acquire Lonmin.
Froneman says 20,000 jobs will be lost if it doesn’t, “because Lonmin will hit a wall”.
Lonmin employs 32,000 people but, with shafts coming to the end of their lives, more than 12,000 of these jobs will be lost whatever happens.
“But the balance are put at further risk if we don’t step up to the plate at Lonmin.”
Lonmin has run out of capital and can’t raise any more. Without Sibanye, its operations will “grind to a halt”, he says.
Froneman says the Labour Relations Act gives unions the right to strike without proper processes such as secret strike ballots.
He says Amcu bused employees from Lonmin into a stadium to take part in the mandating process preceding its strike on the gold mines.
“People get abused through mass meetings and orchestrated into agreeing to strikes. There needs to be a lot more process involved to ensure this is what individual employees want.”
He also believes Amcu is overstating its membership numbers.
“We’ve tried to verify them through legal processes, which they keep on preventing from happening. Why would they do that?”
Sibanye is pursuing legal means to terminate the strike, which has seen productivity halve, by extending the wage agreement reached with the other unions to Amcu members. Mathunjwa “keeps on resisting”, says Froneman.
He says it’s time the law considered the sustainability of the industry for all stakeholders, not just unions.
As it stands, it is “not business friendly. It was drawn up to address legacy issues, but that was 24 years ago.”
This kind of thing is “foremost on investors’ minds” and why SA is ranked lowest in labour relations in the Fraser Institute labour relations index, he says.
It’s also ranked lowest in community relations. In his address to the mining indaba, President Cyril Ramaphosa said the industry was not doing enough in this area, which Froneman disputes.
If we take a weak position [now] can you imagine how we’ll be abused when we start having to do difficult things [at] Lonmin?
“We play our role in uplifting communities but you cannot keep burdening mining companies with costs that make it uncompetitive and deter investors.”
He says Ramaphosa’s assurances about the sanctity of property rights won’t allay the concerns of investors. “I don’t understand how you expropriate land without compensation and it doesn’t impact on the rights of ownership. I just don’t see it. I can tell you investors don’t either.”
Ramaphosa also tried to allay fears about Eskom.
Froneman, who is also vice-president of the Minerals Council SA, says the reality is that if the National Energy Regulator of SA approves Eskom’s tariff demands, marginal shafts will start closing “immediately”, causing 8,000 job losses at Sibanye alone.
Instead of another 10 to 15 years of life for local gold mines, “I’ll be surprised if we have five”.
Ramaphosa called South African mining a “sunrise” industry, but Froneman says the reality is “it’s an industry that is not investing in growth, because the conditions are not right”.
And there’s not much time to fix them. “Commodity cycles come and go. We’ve missed two of them. We can’t afford to miss another.”