February 3, 2013 5:27 pm

SA mining industry faces volatile year

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South Africa’s largest mining companies have seen a rapid shift in workforce union affiliations since last year’s violent strikes that adds to worries that the industry faces another volatile year ahead of midyear wage negotiations.

Miners in the gold and platinum sectors told the FT they had seen significant gains for the militant Association of Mineworkers and Construction Union – which some believe fuelled the protests at Lonmin’s Marikana mine last year where 34 workers were shot and killed by police.

Amcu, which began making inroads into platinum just over a year ago, is one of a number of upstart unions considered more radical in their approach. They are challenging the established National Union of Mineworkers (NUM), long associated with the ruling African National Congress.

Companies also saw a fragmentation of union representation, with some workers informally banding together to make demands during last year’s unrest, potentially complicating future negotiations.

“There is certainly a very quick shift in union allegiances, and it has all got a bit chaotic,” said Jon Bergtheil, analyst at Citigroup. “There is a passing of the baton in terms of the balance of power between NUM and Amcu and, for a time, both unions are likely to be claiming some groups as members.”

The shift comes amid a difficult outlook for the platinum and gold sectors that some fear could mean more shaft closures and job losses, further exacerbating already-tense labour relations.

“It is going to be a challenging year,” said a South African industry official. “There is definitely potential for thousands more job losses.”

The changes are contributing to concerns that the two-yearly wage negotiations – due to begin in May or June – could be a volatile affair, with Amcu likely to have an official seat at the table for the first time.

“To the extent that there are rival unions, that will ratchet up animosity at plant level,” said Andrew Levy, a labour relations adviser. “Amcu have made very, very rapid strides, and the weakness of the NUM is quite apparent in the whole of the sector, beyond platinum – in coal, gold, the entire industry.”

Harmony Gold in January suspended operations at one of its key mines, employing 6,000 people, after violence and damage to equipment, and said it had seen Amcu making striking gains in membership.

Anglo American Platinum, which sparked outrage in South Africa with a restructuring plan that could cost 14,000 jobs, has said its union membership was “in flux”.

Simon Scott, the acting chief executive at Lonmin, where unrest erupted into violent protests last August at its Marikana mine, told the FT that “it is clear that the union movement in South Africa is going through a period of change”.

“We are proactively engaged in reshaping and improving existing relationships and forging new ones against the background of a rapidly changing environment.”

Some analysts hope that bringing Amcu and other new unions into formal negotiations will help tone down their more radical rhetoric and temper their demands.

“They will have achieved, at a stroke, a far more important position,” said Mr Levy. “They won’t be compelled to fight for it. They will be part of the machine.”

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