November 7, 2012 / 12:22 PM / 6 years ago

South Africa coal firms agree wage deal to avoid unrest

JOHANNESBURG (Reuters) - Coal companies in South Africa signed a surprise wage deal with unions on Wednesday in an effort to avoid a wave of deadly illegal strikes that have rocked the country’s gold and platinum sectors.

The Chamber of Mines said the companies, which include Anglo American (AAL.L), had agreed to raise certain entry-level wages by up to 5 percent and offered one-off payments to higher categories of workers.

The main wage agreements in the coal sector do not expire until the middle of next year, but militant unions have ignored existing contracts in platinum and gold, leading to rolling wildcat action that has led to the killing of over 50 people so far this year, most of them shot dead by police.

Phillemon Motlhamme, deputy head for industrial relations at the chamber, said the body that represents the industry was approached by unions in September to ensure that illegal strikes would not spread to coal.

“The National Union of Mineworkers (NUM) and the other two unions asked how we can strengthen our collective bargaining framework and ensure continuous stability in the coal sector,” he said.


The NUM, South Africa’s dominant mining union, also wants to shore up its own base, given that the unrest that has gripped the platinum sector has its roots in a turf war between it and the upstart Association of Mineworkers and Construction Union (AMCU).

“This deal is being used by NUM to reassert its relevance. NUM is desperate to stem that crisis because its position, which always seemed so secure, has suddenly been shaken,” said Loane Sharp, a labor economist at staffing firm Adcorp.

Salaries will be raised by 5 percent for entry-level employees at Anglo, Kangra Coal, Xstrata Coal XTA.L, and Exxaro’s (EXXJ.J) Mpumalanga operations, effective November 1.

Exxaro will give smaller wage increases to workers in other categories, while Anglo, Kangra, Optimum Coal and Xstrata have offered a one-off payment of 2,000 rand ($230) to workers in higher levels.

While there were some disruptions recently to operations at small coal mines due to legal strikes, most companies in the sector have not been affected.

Labor strife first erupted in January at the Rustenburg operations of world No. 2 platinum producer Impala Platinum (IMPJ.J), but gold and coal were initially seen as immune because of their industrywide wage deals.

Platinum has traditionally negotiated on a company-by-company basis, making it easier for a new union to go to individual firms and tell workers they can get better deals.

The sense of security in the gold sector evaporated when the strikes spread to its South African shafts.

NUM was also put on the defensive as workers at big bullion producers such as Gold Fields (GFIJ.J) and AngloGold Ashanti (ANGJ.J) expressed anger with its leadership, which is seen as out of touch with the rank and file.

More than 80,000 miners, or 15 percent of the industry’s workforce, have walked off the job in recent months in the gold and platinum sectors in often violent, wildcat strikes, undermining already shaky growth in Africa’s biggest economy and denting investor confidence.

Wage deals in South African mining have been exceeding inflation in recent years, but workers at the bottom end of the scale are coming off a very low base for dangerous work. The average mine worker also has eight dependents, and so wage hikes do not go far.

If the unrest spread to coal mines, it would have an impact reaching far beyond the industry. Some 85 percent of South Africa’s electricity is generated by coal-fired plants.

Anglo American Platinum (AMSJ.J), the world’s top producer of the precious metal, is still struggling to get more than 30,000 workers back to work as an illegal strike at its Rustenburg operations now in its eighth week.

$1 = 8.6523 South African rand Additional reporting by Sherilee Lakmidas; Writing by Ed Stoddard; Editing by Jane Baird

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