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Striking workers wait near the entrance to the Engen refinery in Durban as the stay away goes into a second week, July 18, 2011. (Rogan Ward/REUTERS/Rogan Ward/REUTERS)
Striking workers wait near the entrance to the Engen refinery in Durban as the stay away goes into a second week, July 18, 2011. (Rogan Ward/REUTERS/Rogan Ward/REUTERS)

South Africa labour strife spreads to mining sector Add to ...

Striking workers in South Africa's petroleum sector are discussing a revised wage offer to end a three-week-old walkout as stoppages spread to the vital mining sector, threatening supplies of coal and gold.

Hundreds of thousands of workers across the country have gone on strike in recent weeks, or are threatening to do so, seeking pay rises of double or triple the 5 per cent inflation rate in mid-year bargaining known as "strike season".

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The labour strife imposes a delicate political balancing act on the ruling African National Congress. The ANC is trying to woo investment while maintaining an alliance with organized labour that delivers much of its voting base.

The gold industry strike to begin on Thursday could cut 16,000 ounces or $25-million a day in output at a time when spot gold is at record highs, having risen to over $1,620 an ounce on European and U.S. debt jitters.

Union leaders are expected to meet petroleum industry officials on Thursday to say whether a revised offer had been accepted, said Nerine Kahn, director of the Commission for Conciliation, Mediation and Arbitration, South Africa's labour mediator.

She did not say what the revised offer was. So far employers have been offering an 8 per cent rise, while unions have been asking for a 9.5 increase.

"Parties confirm that a revised offer was tabled, which closes the gap between the unions and the employers and that negotiations have reached a point that may resolve the dispute," she said in a statement on the commission's website.

Labour problems in South Africa, the world's fourth-largest gold producer, are unlikely to have an immediate impact on spot prices but could become a supportive factor if strikes are prolonged, analysts said.

Ripple effects in Africa's largest economy will engulf other sectors including retailers who will be hit as striking workers miss paycheques, and the earnings of big listed miners for the quarter will also be squeezed.

The petroleum strike has delayed deliveries of fuels, sparked panic petrol buying and will likely dent economic output.

South African strikes typically last up to a few weeks with the average recent settlements being about 8 per cent annually.

The well-above-inflation settlements have eroded South Africa's global competitiveness. Its workers already earn more than in other emerging markets - about six times more than the average Chinese worker - and are less productive.

Employers, who regard the wage deals as a cost of doing business, usually try to ramp up production after reaching new labour deals to make up for lost production.

Analysts say the biggest threats to the economy would be posed by strikes that stretch into mid-August or work stoppages that hit state-utility Eskom or the platinum industry.

Eskom provides almost all of South Africa's power, while platinum is a vital industry, as South Africa is the world's largest producer of the precious metal.

GOLD STRIKES

Investors sent shares of major gold producer AngloGold Ashanti down more than 3 per cent on Tuesday because of concern about lost output.

The pending gold strike could see 100,000 workers downing tools, according to Reuters calculations based on company figures. Other companies that would be affected are Gold Fields and Harmony .

Analysts have said the gold miners could maintain some output by turning to stockpiles, but Harmony has its plants and mining operations would be shut during the strike.

The powerful National Union of Mineworkers (NUM) wants a 14 per cent increase in wages. Gold employers have offered between 7 and 9 per cent.

In another labour dispute, coal miners walked off the job from the overnight shift on Sunday. Eskom relies on coal for almost all of its power plants but said it had enough in store to last about five weeks.

Unions and coal companies will meet again on Thursday.

Employers, already struggling with labour laws seen as some of the most rigid in the world, have been slashing jobs in recent years to reduce personnel costs, making it more difficult for South Africa to cut into its 25 per cent unemployment rate.

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