South Africa—Wage negotiations between the Chamber of Mines and the four unions Association of Mining and Construction Union (AMCU), the National Union of Mineworkers (NUM), Solidarity and UASA may be drawing to a close.
The Chamber of Mines chief negotiator Dr. Elize Strydom released the following statement:
“Both UASA and Solidarity have indicated their intention to accept the offer pending final consideration. The companies expect further feedback from AMCU and the National Union of Mineworkers.”
The Chamber of Mines represents the companies AngloGold Ashanti (NYSE:AU; ASX:AGG; JSE:ANG), Evander, Harmony (NYSE:HMY) and Sibanye Gold (NYSE:SBGL; JSE:SGL).
Dialogue between the parties began early last year following a worker’s strike that continues through today. Union workers demanded entry-level pay be doubled and proportionate wage increases be made for other pay grades. The mining companies argued that miners already received wages higher than similar workers in other industries. Further, the Chamber of Mines submitted that such a concession would be unfeasible since 40% of shafts were only marginally profitable or were operating at a loss.
Instead, the mining companies offered unions a three-year deal, which would begin with a 9% pay raise the first year and eventually settle at 7.5% in the third year. Not surprisingly, this offer did very little to appease the disgruntled workers.
So far, labor relations have been facilitated by the minister of the Department of Mineral Resources (DMR) Ngoako Ramatlhodi. In a strange turn of events, however, President Jacob Zuma replaced Ramatlhodi with Mosebenzi Joseph Zwane. Zwane is the former MEC for Agriculture and Rural Development, as well as Economic Development, Tourism and Environmental Affairs in the Free State province. Zwane, however, has virtually no experience in the mining industry.
Questions Over New Mining Minister
Suffice it to say, the public is wary of Zwane’s appointment.
Some have speculated that Ramatlhodi’s replacement may have been a result of his feud with Bridgette Radebe, President of the South African Mining Development Association. Radebe is also married to current Minister of the Presidency Jeff Radebe. Radebe wished to prevent Exxaro Resources (JES:EXX) from acquiring Total Coal South Africa (TCSA), a company in which she was 26% shareholder. Ramatlhodi allowed the acquisition.
“It will be up to the new minister to re-assert the importance of continuing the dialogue that was started by Minister Ramatlhodi,” commented South African political analyst, Daniel Silke.
The platinum mining industry currently accounts for 7% of South Africa’s GDP; moreover, South Africa's platinum output represents nearly 75% of the global platinum supply each year. Unfortunately, commodity prices have been plummeting, compounding the need for quick and efficacious action; the Volkswagen controversy has only made matters worse.
Volkswagen’s (ETF, FRA:VOW) diesel cars use platinum catalytic converters. If consumers choose to bypass these vehicles for more eco-friendly alternative, the ailing platinum industry would suffer yet another blow from the lower demand.
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