The crisis in South Africa's beleaguered mining sector took another turn for the worse on Monday after talks between the Chamber of Mines and trade unions intended to bring an end to a wave of wildcat strikes in the gold sector ended in failure.
As many workers rejected proposed wage increases from gold companies the unrest continued to spread, with Gold Fields Ltd., the world's fourth-largest gold producer, saying a new strike had broken out at its KDC East mine, meaning virtually the group's entire South Africa operations have been suspended because of industrial action. The company relies on South Africa for almost half its total production and only one of its mines there has been untouched by the strikes.
"The situation is grave," Willie Jacobsz, head of investor relations at Gold Fields told the Financial Times. "All of Gold Fields' South African mines, with the exception of the developing South Deep, are now engaged in illegal strike action, putting thousands of jobs at risk and increasing the likelihood of major restructuring."
Mining executives have warned that a continuation of the strikes, which began in August, will accelerate job losses and risk the closure of mines already operating on tight margins. More than 100,000 miners have been caught up in the industrial strife which has triggered the biggest crisis in one of the world's top 10 mining sectors since the end of apartheid.
"Never in 30 years have I dealt with anything like this," said an industry official, and that people were "at a loss to know how to take it forward."
South Africa's three largest gold companies – AngloGold Ashanti Ltd., which has been forced to suspend its South Africa operations since September, Gold Fields and Harmony Gold Mining Co. Ltd. – had proposed a series of improvements last week to miners' salary packages in a bid to find a resolution to the industrial action.
They did so on the understanding that existing wage agreements would not be broken and that the proposals would not increase their overall wage bills by more than 3 per cent. But on Monday, the Chamber of Mines, which has led negotiations with unions, said there were "mixed reactions" from miners and no agreement for the strikers to return to work.
The failure to reach a settlement means companies will act individually and may now look to take disciplinary action against strikers, which could lead to large scale dismissals.
Anglo American Platinum, the world's top platinum producer, which has been forced to suspend about 40 per cent of its production due to strikes, has already sacked more than 12,000 illegally striking miners. Other smaller companies have followed suit as tensions rise in the industry and workers ignore traditional unions.