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South Africa's Zuma appeals to gold firms, unions to avoid strike

Members of the National Union of Mineworkers (NUM) take part in a strike in the central business district area of Johannesburg, August 27, 2013. REUTERS/Ihsaan Haffejee

By Pascal Fletcher and Peroshni Govender

PRETORIA (Reuters) - South African President Jacob Zuma on Tuesday appealed to unions and companies in the gold industry to avoid an imminent strike that could seriously damage Africa's largest economy, force mine closures and cost thousands of jobs.

Gold miners were set to strike for higher pay from Tuesday, after talks between unions and companies broke down last week.

Labour unrest since last year has left more than 50 people dead and put renewed pressure on Zuma ahead of elections next year. The rand last week slid to a four-year low.

With stoppages in auto and building sectors already hitting an economy suffering from slow growth and unemployment at 25 percent, strikes could cripple an industry that has produced a third of the world's bullion but is now in rapid decline.

"A strike hurts both sides. They must find a solution," Zuma said at a briefing with reporters in Pretoria.

His comments were echoed by Mining Minister Susan Shabangu, who said the government was willing to intervene to help both sides "find each other soon".

"If indeed we are going to have a protracted industrial action, it will impact negatively on the economy," she told Reuters at the presidential briefing.

"If there is a need for government to intervene, we will engage the parties," she said.

Economists say South Africa's economy can ill afford the lost output - estimated at more than $35 million (22 million pounds) a day - from an industry shutdown in gold.

Labour and management are poles apart on wages, with the dominant National Union of Mineworkers (NUM) seeking 60 percent pay hikes for entry-level miners and the more hardline Association of Mineworkers and Construction Union (AMCU), pushing for 150 percent.

Companies say they cannot afford the hikes in the face of soaring costs and depressed prices. The industry has offered pay increases of up to 6.5 percent.

The president of South Africa's Chamber of Mines, which represents major bullion producers such as AngloGold Ashanti (JNB:ANG), Gold Fields (JNB:GFI) and Harmony Gold (JNB:HAR), has warned unions against building up workers' hopes.


The unions seem determined to end what they see as a culture of low pay dating back to the apartheid era when impoverished black miners migrated to the industry's heartland for jobs.

White rule ended in 1994 and the unions say miners are due a bigger share from the multi-billion-dollar industry.

The average South African miner's monthly pay, including benefits, totalled 15,840 rand at the end of last year, according to government statistics. That is above the average of 14,386 rand a month for all non-farm workers.

But South African mining companies are struggling themselves, hurt by the rising cost of extracting ore from the world's deepest mines.

Johannesburg's index of gold mining companies (.JGLDX) has fallen 47 percent over the last 10 years, while Thomson Reuters index of Australian gold producers (.TRXFLDAUPAURU) has risen 27 percent and a similar index of Canadian gold producers (.TRXFLDCAPAURU) has risen 67 percent.

Wildcat strikes have shaken the industry since early last year, coupled with outbreaks of violence linked to a turf war between the NUM and the AMCU.

The mining crisis has triggered damaging credit rating downgrades and criticism of Zuma and his ruling African National Congress over their handling of the violence.

(Additional reporting by Olivia Kumwenda-Mtambo; Writing by David Dolan; Editing by Louise Ireland and Jon Herskovitz)