Gold shares shine bright despite threat of strike

Strike could damage investment prospects for mining industry

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By South African Press Association

JOHANNESBURG, July 25 -- The looming strike in the gold-
mining sector will be short, if it takes place, but it could
scare investors away from South Africa, labour relations
adviser Andrew Levy said on Friday.

quot;The impact, internationally, on South African gold shares
will be a negative one,quot; said Levy of NMG. quot;And there is a
feeling that South Africa is strike-prone. But that's not
true.quot;

The perception that foreign investors would have as a result
of the strike would not be good because gold shares of South
African firms were the most traded internationally.

Econometrix senior economist Tony Twine said gold-mining
sector was no longer the dominant export sector it was 25
years ago.

quot;Last year, gold exports amounted to R42 billion, but it is no
longer the dominant South African export sector which it was
25 years ago,quot; Twine said.

He said the money reflected just less than 10 percent of gold
exports in 2002, and the mining sector as a whole contributed
less than eight percent of the total economic output.

quot;So, if a portion of the gold sector gets into trouble, it will not
have a major effect of the South African economy in a direct
sense.quot;

Twine agreed with Levy that the strike could create suspicion
among foreign investors who already view the country's labour
legislation as unfriendly to capital.

He said: quot;Labour unrest does not enhance South Africa's
foreign image.

quot;Domestic and foreign investors are somewhat suspicious
of the labour legislation environment in South Africa which
some perceive to give workers more rights than their
employers.

quot;In such an environment, a propensity to strike appears to
leave the other stakeholders at a disadvantage which
frightens away investment,quot; he said.

A total of 100,000 mineworkers face the prospect of not
going to work from Sunday due to an impasse on pay rise
talks. This would be the first time in 16 years mineworkers
from the gold industry go on strike.

The strike was targeted at big mining firms like AngloGold,
Gold Fields, and Harmony. Two coal mines, Ingwe and
Kuyasa, were also to be targeted, but were taken off the list
after a settlement was reached.

The French news agency AFP reported on Thursday that
mineworkers are demanding a quot;double-digitquot;, meaning that
they would settle for 10 percent, wage increase across the
board.

But mining bosses say they cannot go any higher than the
average 9 percent currently on the table, AFP reported.

It said the union is also demanding that a grading system for
workers be reviewed, pushing them to higher grades, which
would improve their salaries.

Chamber of Mines chief negotiator Frans Baker said mining
firms could lose about R125 million on production a day if the
planned strike went ahead.

Total wage losses could be R50 million a day and the country
would lose R125 million a day in exports, Baker said.

He said on Thursday that the mineworkers' wage demands
were unreasonable, and impossible for gold mines to meet.

quot;The problem is the National Union of Mineworkers' demands
are unreasonable, and it is demanding a nearly 30 percent
wage increase.

quot;If the union does not compromise, they will strike. We cannot
afford the union's demands,quot; Baker said.

On Friday, Baker put out a statement saying the chamber
quot;would like to set the record straightquot; in the light
of quot;contradictory media statements about the wage offers.quot;

He said employers offered wage increases ranging between
9 and 12 percent for workers at the lower categories.

And the higher increase was aimed at achieving a minimum
wage of R2000, he said.

The mine bosses further offered an effective pay rise of
between 16 percent and 28 percent for machine or rock drill
operators.

Other workers were offered a wage increment of between 9
percent and 10 percent. An offer was made to upgrade
machine or rock drill operators to Grade 5.

This would which will result in them receiving pay hike of
between 16 percent and 28 percent.

Baker said the National Union of Mineworkers demanded a
10 percent pay increase across the board, and an upliftment
of all operators to Grade 6 irrespective of the outcome of
objective job grading exercises.

quot;This demand amounts to an increase of 44 percent in the
wages of the employees involved, and a 10 percent increase
in the total Wage Bill,quot; Baker said.

Standard Bank economist Monica Ambrossi urged union
leaders and mine bosses to keep in mind the inflation targets
South Africa has set for itself.

quot;They should try and balance the need to compensate
employees for the increasing prices with the need to insure
the attainment of the country's inflation,quot; she said.