(Adds info on new strike at Bokoni mine, Anglo Platinum
dismissal deadline and mine violence, analyst comment.)
By Devon Maylie
JOHANNESBURG--South Africa's biggest gold producer said it will
consider shutting some mines and dismissing workers if illegal
industrial action continues for much longer, AngloGold Ashanti Ltd
(ANG.JO) said Monday.
Meanwhile, workers at another platinum mine jointly run by
largest platinum producer Anglo American Platinum Ltd (AMS.JO) and
Atlatsa Resources Corp. went on strike at their Bokoni mine, the
companies said Monday, while violence outside Anglo Platinum's
Rustenburg mine escalated overnight.
Strikes in South Africa's mining sector have spread since the
outbreak of the illegal strike at platinum producer Lonmin PLC
(LMI.LN) on Aug 10. While the Lonmin strike, which left 46 dead,
was resolved in September with a pay rise that ranged between 11%
and 22%, other miners have followed suit in hopes they can pin
similar increases.
The industrial action is straining an already tight balance
sheet for many miners, particularly in platinum. AngloGold Chief
Executive Mark Cutifani says 50% of the platinum industry is losing
money even before agreeing to additional wage hikes and that much
of the gold sector had already been looking at ways to downsize
unprofitable operations.
All of AngloGold's South African mines are shut after 24,000
miners embarked on an unprotected strike to demand higher wages a
week ago.
"If it continues, those operations that are marginal will be
closed," Mr. Cutifani said. That will not only lead to job losses,
he said, but hurt South Africa's economy, which relies on the
mining sector for about 50% of foreign-exchange revenue and 8% of
gross domestic product. Mr. Cutifani said the longest strike to hit
AngloGold was three weeks and if the current industrial action
exceeds that, the company will have to start making the "tough"
decisions about closures and job losses.
Anglo Platinum's Rustenburg operations, which account for about
a third of its total output, also remain shut due to strike action
that started last month. The company said miners had until 4 p.m.
Monday to return. Fewer than 20% of workers showed, the company
said, and now have to appear before a disciplinary panel on Tuesday
to avoid being fired.
Local police spokesman Thulani Ngubane said violence around the
Anglo Platinum Rustenburg mines increased in recent days with the
death of a man outside one of the hostels after he was stabbed by
protesters when he attempted to cross a roadblock. The company and
police haven't identified the man yet. His death follows the attack
on a National Union of Mineworkers leader at the Anglo Platinum
operation when his house was petrol bombed Friday night. He escaped
with injuries.
Like AngloGold, Anglo Platinum has warned that if the strike
doesn't end soon it will be forced to consider closing some of its
mines which already don't make much money. Lonmin already closed
one of its mines in development, leading to the loss of about 1,200
contractor jobs.
"The combination of declining production and unrelenting
inflationary pressures suggests that almost all mature South
African operations are likely to face downsizing within the next
12-36 months at best," SBG Securities analyst David Davis said in a
recent note.
AngloGold said it negotiates wages through a bargaining council
that includes all gold mining companies and unions. Currently, the
gold sector is in the middle of a two-year wage agreement. Gold
Fields Ltd. (GFI.JO), which is also trying to end a strike at
several mines, said last month it wouldn't entertain a wage rise
outside the structures of the bargaining council.
To tackle the spreading unrest, the Chamber of Mines, the
Congress of South African Trade Unions, the National Union of
Mineworkers and representatives from the departments of minerals
and labor have been meeting to try and resolve the onslaught of
wage demands that has closed some of the country's biggest gold and
platinum mines and cut vital revenue to government budgets.
But Cosatu and the NUM, faced with some members moving to rival
unions that promise workers higher wages, have become more
combative and called on mining companies to consider looking at all
wages before agreements are over.
AngloGold Ashanti's South African operations accounted for
approximately 32% of total group production during the first half
of the year. Approximately 35,000 people are employed across
AngloGold Ashanti's South African operations.
AngloGold said at present, the gold industry is in the second
year of a two-year wage agreement with the latest increases,
ranging from 8% to 10%, awarded to the workforce in July, under the
agreement reached in 2011. A similar increase was awarded last
year. South Africa's annual Consumer Price Inflation was 5% in
August.
-Write to Devon Maylie at devon.maylie@dowjones.com