Wage negotiations in South Africa's coal industry threaten to sour after the country's largest mining union Wednesday held out the threat of strikes following only the first official meeting between the two sides.

The National Union of Mineworkers, together with trade unions Solidarity and UASA, met with industry body the Chamber of Mines with a list of demands that included an above-inflation 15% increase in workers' wages.

The chamber, meanwhile, said that while the colliers it represents tabled offers on some demands they needed further information before a wage offer can be made.

"If this is going to be the attitude, then we have no option but to approach our members for a mandate. If that mandate means strike action, so be it," said NUM General Secretary Frans Baleni.

NUM spokesman Lesiba Seshoka said that with food price inflation currently at 14.9%, the cost of living has risen too high for blue-collar workers. He said the union has already begun consultation with its members, but won't return to the bargaining table until a wage offer is presented.

The Chamber of Mines, which represents companies including Anglo American PLC (AAUK) and BHP Billiton Ltd. (BHP), in 2007 agreed with the NUM wage rises of between 7.5% and 10% in the first of a two-year deal and consumer price inflation plus one percentage point in year two.

"Even though we have received a set of demands from the unions that will result in excessive cost increases, employers in the industry have been thinking of some creative ways in which to improve terms and conditions of service on coal mines," said Frans Barker, the chamber's negotiator.

He said he is confident both sides have the best interests of the industry and the country at heart.

Solidarity spokesman Jaco Kleynhans said that with South Africa pursuing large infrastructure development, the coal industry is in a good position, yet workers are struggling with consumer price inflation.

"Workers cannot receive a CPI increase, but they have to be remunerated for their living costs," Kleynhans said. "Workers' living costs are high."

Official consumer price inflation was 8.5% on the year in March and the South African Reserve Bank has forecast it will continue on a downward trend, averaging 5.4% by the final quarter of 2010. At the same time, the economy contracted an annualized 1.8% in the final three months of 2008, and is widely expected to have shrunk again in the first quarter of this year.

The next round of wage negotiations will take place on Tuesday.

 
   -By Robb M. Stewart, Dow Jones Newswires; +27 11 783 7848; robb.stewart@dowjones.com