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Sustainability key as gold talks with a difference kick off

Dr Elize Strydom

Dr Elize Strydom

Photo by Daune Daws

22nd June 2015

By: Martin Creamer

Creamer Media Editor

  

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JOHANNESBURG (miningweekly.com) – The sustainability of South Africa’s hard-pressed gold mining industry is expected to be at the heart of the industry’s crucial set of wage talks that began in Boksburg on Monday.

The five gold mining companies concerned are expected to ask their 120 000 employees to accept inflation-related increases now, so that they can benefit from gain share when the gold price lifts to higher levels in the future.

The negotiations on wages and other conditions of service in the gold industry are between five gold mining companies – AngloGold Ashanti, Evander Gold Mines, Harmony Gold, Sibanye Gold and Village Main Reef – and four unions – the Association of Mineworkers and Construction Union (AMCU), the National Union of Mineworkers (NUM), Solidarity and Uasa – as the current wage agreement expires at the end of June and a new agreement becomes effective from July 1.

Dr Elize Strydom will lead the negotiations on behalf of the producers.

Clearly, job retention increases sustainability and jobs are also the primary focus in unemployment-plagued South Africa.

Employers are expected to go all out to persuade employees to dispense with the traditional positional bargaining model of coming from two extremes to arrive at a solution somewhere in between.

Instead, talks with a difference will be promoted, pushing the importance of job retention through the implementation of an economic and social sustainability compact.

One of the things that Mining Weekly Online expects to receive a lot of attention in this round of discussions will be the economic consequences of unrealistic demands and the critical importance of job retention to both individual employees and their dependants.

Word on the sidelines is that the different model will have job security at its heart.

Already the talks have moved away from the Chamber of Mines venue to a neutral conference centre in Boksburg, with three facilitators helping the two sides to engage one another constructively.

The facilitators will chair all three days of engagement to Wednesday.

The disastrous platinum sector route is being given a wide berth and the narrow focus of the past spurned by employers in the interests of sustainability and gain share when things improve.

Unrealistic demands are being condemned as being anti job retention and gain share is being offered on the basis of an improved gold price.

Gold mining companies running into negative margins of profit have already reported their positions to government in compliance with Section 52 of the Minerals and Petroleum Resources Development Act, which deems that mining companies have entered dangerous territory when margins fall below 6%.

Some mines that had 30% margins during the 2013 gold industry wage talks now have margins of less than 10% and a combination of the new Eskom tariffs and the payment of carbon tax as envisaged will push them right over the edge.

An opportunity for increased productivity is presented by gold miners still working only 270 days of 365 days in the year.

What makes the clinching of an economic and social sustainability compact less onerous in gold than in platinum is the absence of a competitive environment in gold and all the gold companies represented have high levels of disclosure and transparency and corporate governance.

Information can thus be put in the public domain without compromising regulators and getting the gold companies on the wrong side of insider information.

If the gold price rises, the marginality will change to make worker gains possible.

The entry-level salary of an underground gold mineworker of R6 000 becomes R12 000 when pension, medical, variable earnings and accommodation and living-out allowances are added.

Gold companies thus currently need to have at least R12 000 at the end of the month for everybody on a mine as the minimum remuneration.

A compact could keep the lives of the mines going to allow individuals to earn more than R1.8-million over the ten-year period at 5% yearly increase.

In that way, mineworkers would continue to support their dependants as well as downstream and upstream jobs.

The general retrenchment package of less that R100 000 by contrast would be further eroded by taxation and only serve as a short-term palliative.

Even though South Africa produced only 167 t of gold last year compared with 360 t ten years ago, it still paid R20-billion in wages, R1.6-billion to the government in tax and royalties and spent capital of R9.6-billion.

Thus, even in the downturn, the gold sector is of crucial importance as an economic contributor and an earner of vital export revenue.

Edited by Creamer Media Reporter

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