Impending wage negotiations between labor unions representing workers at South Africa’s gold and coal mines and the Chamber of Mines of South Africa, representing the mining companies, were scheduled to begin in early June 2013. In late May, the National Union of Mineworkers (NUM) said in a submission to the Chamber of Mines that it would be seeking an entry-level minimum monthly wage of R7,000 for gold and coal surface workers, up 49% from about R4,700, and R8,000 for underground workers, up 60% from about R5,000. (The South Africa rand/U.S. dollar conversion rate at the end of May was about R10 = $1, near a 10-year low for the rand). NUM also said it wanted 15% increases in all other wage categories.

As of May 26, the Association of Mineworkers and Construction Union (AMCU), NUM’s militant rival, had not said what its wage demands would be.

NUM’s wage demands were variously characterized as “crazy,” “outrageous,” and “nutty,” among other adjectives, by industry participants and observers.

In late May, South Africa’s government weighed in when President Jacob Zuma called on the unions to act in the best interests of the country and not wreck the economy in pursuit of higher wages.

Much of the ongoing turmoil regarding labor in South Africa’s mines results directly from competition for members between the relatively new AMCU and the historically dominant NUM. NUM feels compelled to show its dwindling support base that it is on their side and can deliver a substantial pay increase; otherwise it risks being sidelined by AMCU in the gold and other industries, as is already happening in platinum.

In a sense, the mines are caught in the middle of this turf war between the unions.

In South Africa’s platinum mining sector, wages are negotiated on a company-by-company basis, not collectively as is the case for gold and coal. Platinum producers are not included in the current gold and coal wage negotiations, however, platinum producers have their own labor-related issues.

On May 10, Anglo American Platinum announced revisions to its proposed restructuring, originally announced in January, that would have shut down some unprofitable production and resulted in the loss of about 14,000 jobs.

Unions and government said those job losses could not be allowed to happen, and a period of negotiations followed.

Anglo Platinum’s May 10 revisions grew out of the negotiations and included a reduction in the number of lost jobs to 6,000. However, the AMCU was continuing to insist that no jobs could be lost, and there remained some potential for labor unrest resulting from Anglo Platinum’s efforts to get its operations on an economically sustainable footing. Further discussions and negotiations were planned for late May.

On May 23, platinum producer Lonmin reported that its negotiations with AMCU to conclude a new union recognition agreement had ground to a halt, with no hope of further progress. As a next step, Lonmin initiated an arbitration process, referring the matter to South Africa’s Commission for Conciliation, Mediation and Arbitration.

Lonmin and AMCU will present their respective views to the arbitrator, who will then make a ruling that will be binding on both parties. There is no set timeframe to conclude this process, but Lonmin said it might reasonably be expected to take four to six weeks to complete.

“We are disappointed that we have been unable to find common ground but remain hopeful that the dispute will be resolved, which is in all of our interests,” said acting Lonmin CEO Simon Scott.

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