SA Miners ‘Demand Their Slice of the Pie’ As Strikes Threaten

By Natale Labia

The South African National Union of Mineworkers (NUM) announced yesterday that it had voted in favour of strikes beginning next Tuesday at the world’s largest diamond producer, De Beers, over a wage dispute.

Eleven thousand miners are preparing to lay down their tools after rejecting De Beers’ latest offer of an 8 per cent increase. The NUM, the country’s largest mining union, is demanding 11 per cent. "Workers have told us … that double digits is the route. They’ve reiterated that this afternoon by calling for strike action to force De Beers to accede to the demands," said Peter Bailey, the NUM’s negotiator at De Beers.

De Beers said yesterday in an emailed statement that it is determined to continue operating its mines through a contingency plan. "We are committed to reaching an amicable settlement and are confident that our final offer is fair and attractive," it said.

Anglo American, 45 per cent owner of De Beers, "will be strongly affected" by strike action said a Numis analyst. Shares in Anglo American fell 187p to 2,853p yesterday.

Analysts also warned that increasing pressure from South African trade unions could affect the stock value of London-listed gold and platinum mining houses. "Strikes are becoming an increasingly political issue in South Africa. Workers are being hit by rising inflation and want to capitalise on surging metals prices. They’re starting to demand their slice of the pie," says Numis’s analyst Mark Elliott.

Anglo American, Anglo-Gold Ashanti, Lonmin and Aquarius stock "could be badly affected. Prospects for South African mining in general are dire", says Seymour Pierce’s Charles Kernot. As the strikes continue, forcing some firms to cut production, the price of gold and platinum will increase.

This will benefit "those companies that have more mechanised production techniques and contract-based labour. These firms will capitalise on higher commodity values, which will be reflected in their share price. Those that cannot will suffer."

Aquarius Platinum has lost 58p since Monday to close yesterday at 1,481p after cuts in production due to last week’s strike, with Seymour Pierce downgrading it to sell status. The mass-action at the Kroon-dal mines ended on Monday, but led to a drop of 4,700 ounces of platinum production. Despite a switch to more capital-intensive production techniques, an analyst described the trading update on Wednesday as "not good news at all".

Similarly, AngloGold Ashanti, one of South Africa’s biggest gold miners, raised its previous 7 per cent wage increase on Monday, but unions continued to demand a 15 per cent rise. "We reject the 7.25 per cent. They utter complete bile at us," said Deon Boqwana, one of the NUM negotiators.

The union has also voiced concern at the rising number of mining casualties. The bodies of two miners recovered on the weekend at the AngloGold’s Moab Khatsong mine has taken the number of deaths this year in South African mines to 110, showing no improvement on last year’s statistics.

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