State does nothing as mines shed jobs

Picture: BUSINESS DAY

THE government is standing by idly while the mining sector contemplates shedding 180,000 jobs over the next five to seven years because of labour unrest.

Gold miner Harmony said this week it had no reaction from government to a decision not to reopen its Kusasalethu mine near Carletonville, which employs more than 6,200 people.

The mining sector, a pillar of the economy, has seen employment drop from 1.4-million in 1994 to 523,000 last year, said Loane Sharp, labour market analyst at Adcorp.

Harmony faces a "dangerous situation" because of ongoing tensions between the National Union of Mineworkers (NUM) and the Association of Mineworkers and Construction Union (Amcu).

The union rivalry sparked widespread wildcat strikes in the platinum and gold sectors last year. At Lonmin's Marikana mine near Rustenburg more than 40 people died in the conflict. At Kusasalethu, two people were killed in November and work stoppages, including an underground sit-in, continued until the mine shut operations early for the Christmas break.

Harmony said negotiations with workers and labour representatives for almost two-and-a-half months have been fruitless.

"We haven't made any advances. Past experiences and conditions of employment have simply been disregarded," said CEO Graham Briggs.

The Department of Labour said union rivalry "is part and parcel of labour relations but rivals should not resort to violence, nor should they act in ways that may put jobs at risk". In the case of disputes, parties should go to the Council for Conciliation, Mediation and Arbitration (CCMA), the department said.

Miners will be paid until a final decision is made about the future of Kusasalethu, which has a life of mine of more than 20 years and earned R2.3bn in revenue in the 2012 financial year. It was expected to contribute nearly a quarter of Harmony's production this year.

The government's inaction on the labour situation has been damaging to the country's image as an investment destination and has led to unrest spreading.

Farmworkers in the Western Cape resumed protests this week and unrest is likely to spread to the construction and transport sectors this year, Sharp said.

"What concerns investors most is that when the strikes broke out in South Africa last year there was quite obviously a lack of leadership because of the lead-up to the ANC policy conference in Mangaung in December. None of the senior politicians were willing to come out and tell the labour force that their actions were unacceptable," said Ben McEwen, analyst at CIBC in London.

"The situation cannot be resolved unless there is some intervention on a higher government level. And, until that happens, one can be sure there will be more job losses," McEwen said.

"Investors are prepared to invest in the Democratic Republic of Congo, Ivory Coast and Ghana, but they are not prepared to touch South African stocks because of this situation."

Elize Strydom, chief negotiator at the Chamber of Mines, said it would be "welcomed by the chamber if government would more robustly share its views on wildcat strikes and the long-term effect this has on investment and job security".

Anglo American Platinum, the world's biggest platinum miner with more than 55000 employees and contractors, saw most of its mines shut for more than six weeks last year because of wildcat strikes.

The Department of Labour said the only remedy for mine job losses is for affected employees to refer a case to the CCMA if they feel they have been unfairly dismissed. In the case of Kusasalethu, the department "would urge the employer to involve the CCMA and to try to find an alternative to retrenchments".

Harmony's decision not to reopen Kusasalethu is "enormously grave", said Peter Major, head of mining at Cadiz Corporate Solutions. "I don't think anyone outside of the investment community realises how grave this decision is - certainly not government or the workers. It's a great asset and if government had half a brain it would be incensed at the prospect of that asset being closed."

The Department of Mineral Resources did not respond to numerous requests for comment.

* This article was first published in Sunday Times: Business Times

Source: http://www.findata.co.nz/News/18692883/State_does_nothing_as_mines_shed_jobs.htm

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