Power supply threatened as NUM strike hits coal sector
Only a threat in the long term – Eskom
LOCAL coal mines yesterday ground to a halt as 30 000 National Union of Mineworkers (NUM) members went on strike for higher wages.
The strike might place the supply of coal at Eskom at risk, especially if it is prolonged, and affect the power utility’s ability to produce power amid electricity supply constraints.
The coal mineworkers are downing tools as a strike looms in the gold sector with the Association of Mineworkers and Construction Union (Amcu) scheduled to hold a mass meeting later this week where members will decide whether to strike after rejecting final offers.
The mining industry is already on a knife’s edge hurt by the fall in global demand, tumbling commodity prices, low confidence and job cuts.
Colen Garrow, an economist at Lefika Securities, said yesterday that a strike in the coal sector would probably threaten the country’s electricity supply, which had been stable for almost two months.
Eskom spokesman Khulu Phasiwe said yesterday that it was too early to determine the impact of the coal strike on the power utility.
“We have 30 days of stockpiles for all our coal-powered stations. Depending on how long the strike continues, we should be able to weather the storm. If the strike continues for longer, it will hamper our ability to supply power,” Phasiwe said.
Garrow noted that the consequences of mining strikes were far reaching as they not only affected the economy, but dented investment perceptions in South Africa.
The five-month platinum wage strike last year was a case in point, he added.
“The repercussions of strikes are broad. We have had a contraction of the gross domestic product (GDP) in the second quarter and the strikes are not going to help. If you look at the GDP, we are slithering closely to the verge of a recession,” Garrow said.
Growth outlook
Last week Finance Minister Nhlanhla Nene warned that GDP growth for the year would probably come in below forecasts of 2 percent made during the tabling of the Budget in February.
He said electricity supply constraints and weak domestic and global growth were the main downside risks to the country’s growth outlook.
The NUM said 30 000 members had gone on strike at 6pm yesterday after the collapse of wage talks.
Arbitration body, the Commission for Conciliation, Mediation and Arbitration (CCMA), had issued NUM with a certificate of non-resolution last week.
In the gold mining sector, the risk of a strike by workers increased after Amcu rejected a pay offer.
The negotiations came to an abrupt end when employers could not agree on the NUM’s demand for an increase of R1 000 a month for the lowest category and a 14 percent wage hike for artisans, miners and officials.
“The strike will be indefinite if the Chamber of Mines does not come on board to resolve the differences,” Livhuwani Mammburu, the acting NUM national spokesman, said yesterday.
Chamber of Mines spokeswoman, Charmane Russell, said: “It is too early to gauge the impact of the call for a strike in the coal sector by the NUM.”
The Chamber of Mines has been representing Anglo Coal, Delmas, Exxaro, Kangra, Msobo and Glencore in the coal mining wage talks.
Gold sector
In the gold mining sector, the risk of a strike by workers at local gold mines increased after Amcu, which is the secondbiggest union in the industry and led last year’s devastating five-month strike in the platinum mining sector, rejected a pay offer even as the other unions accepted it.
In terms of the gold wage talks Amcu, which represents 30 percent of the 94 000 gold employees, was granted a certificate of non-resolution by the CCMA, meaning they could call a protected strike.
Amcu’s national treasurer Jimmy Gama said yesterday: “We anticipate that we will hold our central mass meeting between Saturday and Sunday.”
The wage proposals by gold mining producers were “pathetic”, Gama said.
The gold mining companies have sought to avoid a repeat of last year’s five-month strike at platinum mines that crippled output, stifled economic growth and led to job losses.
Gold has fallen 42 percent from a June 2011 peak, and the largest producers in South Africa, whose mines are the deepest and among the oldest in the world, are losing money on about 35 percent of production at current prices.
“Amcu is the strongest union in the most important operations of these three employers,” Gama said.
“We are controlling the main production areas of these employers,” he said.
“When Amcu decides to go on strike, I can tell you that there will be no production coming out, even if these other unions do not do so (go on strike).”
On the other hand, NUM, trade union Solidarity and Uasa had signed a three-year agreement with AngloGold Ashanti and Harmony on Friday, where they jointly hold a 62 percent representation.
The agreements are effective from July 1, 2015, and end on June 30, 2018.
A strike at AngloGold and Harmony would not be protected once the three unions signed the agreement, Elize Strydom, the chief negotiator at the Chamber of Mines lobby group, said.
This means workers risk losing their jobs if they aren’t at work. – Additional reporting by Bloomberg