July 10, 2013 7:34 pm

Anglo American chief warns on S Africa mining talks

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Mark Cutifani©Bloomberg

Mark Cutifani, chief executive of Anglo American, warned on Wednesday that the wage negotiations beginning in South Africa’s mining sector will determine not only the future of the industry, but also the future of the continent’s largest economy.

Speaking to the Financial Times a day before gold miners open salary talks, Mr Cutifani said: “[I am] worried for South Africa, I’m worried for the industry and I’m worried for the people. We have got to get the balance right”.

The mining industry in South Africa is entering two-yearly wage negotiations as many companies are still recovering from a weeks of wildcat strikes last year.

That unrest is estimated to have cost the industry more than R15bn ($1.5bn) in lost revenue, while some 50 people were killed in strike-related violence.

How the wage talks proceed is seen as a major test for the country’s fragile labour relations, with concerns that any further unrest could have a contagion effect on other sectors.

“The period we are in now is the most important period I’ve seen in my time here in the [South African] industry – it is so critical for the future of the industry and the future of the country,” said Mr Cutifani, who is also president of the South African Chamber of Mines.

“It is not just the mines – it’s everyone connected, because the mining industry is so important to South Africa and touches so many parts of the country.”

Mining remains vital to the economy, providing about 500,000 jobs, while contributing about 5 per cent of gross domestic product and being a key foreign exchange earner.

But mining executives say the platinum and gold sectors are in crisis, as companies face rising costs and falling prices, with many shafts either lossmaking or operating on thin margins. They also warn that thousands of jobs could be at risk if companies are forced to accept salary increases above inflation.

Against this backdrop, a newish, more militant union – the Association of Construction and Mineworkers Union (Amcu) – will be involved in the talks in platinum and gold for the first time. It has grown rapidly on the back of last year’s unrest to become the dominant union in the platinum industry, and it is estimated to have about a 17 per cent representation in the gold sector.

It has submitted demands that the minimum wage for underground workers be more than doubled to R12,500 per month – a rallying call during last year’s strikes.

Mr Cutifani, who was chief executive of South African-based AngloGold Ashanti before replacing Cynthia Carroll at Anglo American in April, said the urgency of the issues facing the sector had created greater dialogue between the industry and government.

“I think we are listening better than we have in a long time which is helpful but it’s a complex road and we have all got to be open to finding a solution together,” he said.

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