South African gold producers gear up for strikes from Sunday – by Ed Stoddard and Sherilee Lakmidas (Reuters Canada – August 28, 2013)

JOHANNESBURG (Reuters) – South African gold producers are preparing for bruising strikes that could start as early as Sunday, with some companies planning for stoppages of up to three months in a high-stakes fight between capital and labor in Africa’s biggest economy.

The National Union of Mineworkers (NUM) will give gold producers on Friday 48-hours’ notice of its members’ intention to strike over deadlocked wage talks, a source with direct knowledge of the matter said on Wednesday.

“The decision to issue a strike notice on Friday has now been taken,” the source, who asked not to be identified, told Reuters. Workers could then begin stoppages from the Sunday night or Monday morning shifts in the country’s gold mines.

A complete shutdown of the gold sector could cost South Africa more than $35 million a day in lost output, according to calculations based on the spot price.

This will pile pressure on a struggling economy already weighed down by a slew of ongoing strikes in auto manufacturing, construction and aviation services, and facing threatened stoppages by textile workers and petrol station employees.

On Saturday, NUM gave bullion producers, including AngloGold Ashanti (ANGJ.J: Quote), Gold Fields (GFIJ.J: Quote), Sibanye Gold (SGLJ.J: Quote) and Harmony Gold (HARJ.J: Quote), a seven-day ultimatum to meet its demand for pay rises of up to 60 percent or face strike action.

The country’s Chamber of Mines, which negotiates on behalf of gold producers, said on Tuesday it had made a final offer to unions to increase basic wages by between 6 and 6.5 percent.

NUM, which represents 64 percent of the country’s gold miners, dismissed this offer. Another more militant mining union is seeking pay hikes as high as 150 percent.

The companies say these demands are unrealistic as they are being badly squeezed by rising costs and falling bullion prices.

South Africa’s declining gold industry was caught off guard last year when violent wildcat strikes spread from platinum to gold shafts, costing 5 billion rand ($500 million) in lost output. The strife in the mines, rooted in a union turf war, dented economic growth and led to sovereign credit downgrades.

This time round, the companies plan to be better prepared.

“We have planned for a three-month strike … are prepared for that level of disruption,” said James Wellsted, spokesman at Sibanye Gold (SGLJ.J: Quote).

Experts say producers can shut down costly power-intensive functions such as underground ventilation, mine high-grade deposits with skeleton staff and maintain some surface activity.

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