A strike by thousands of rail, pipeline and ports workers at Transnet is set to enter its sixth day on Tuesday after mediated talks to end the stalemate over higher wages hit a deadlock, boding ill for shipments of SA minerals and the prospects for the broader economy.
“We regret that despite the efforts of the CCMA, the parties were unable to reach each other,” said labour minister Thulas Nxesi, who intervened in the talks between union leaders and Transnet facilitated by the Commission for Conciliation, Mediation and Arbitration (CCMA), a dispute resolution body.
The industrial action, which has forced Transnet to invoke force majeure and reflects wider worker frustration over the cost of living crisis, has started to operationally hit the state-owned company’s biggest clients and some of the country’s biggest corporate taxpayers.
SA’s biggest iron ore producer, Kumba, on Monday became the first major company to start counting the cost of the strike, saying its production and export sales will take a knock as a result of the strike.
The disruptions could cost Kumba 50,000 tonnes a day in lost production in the first seven days and after that, close to 90,000 tonnes per day, with export sales taking a hit of about 120,000 tonnes per day, the company said in a statement.
This means up to $4.9m (R88.8m) lost per day for the first seven days and $8.82m per day thereafter, while Kumba will lose $11.76m daily in export sales at the current iron ore price of $98 per tonne.
Exports
Kumba generated the bulk of its revenue in the six months to June from exports, with China accounting for more than two-fifths, Europe close to a third and the rest of Asia about a quarter.
The industrial action by the SA Transport and Allied Workers Union and the United National Transport Union, which account for the majority of Transnet’s 55,000-strong workforce, rippled through the stock market on Monday.
Exxaro, one of the country’s biggest coal producers, skidded nearly 5%, Kumba slumped 3% and Thungela Resources lost nearly 1.2% as investors began to worry about the potential effect on profits.
Contingency
The miners rely heavily on the rail and port infrastructure of Transnet — which is described as the hub for the immense corruption under the state capture project — to move their dry-bulk commodities such as coal and manganese to customers as far afield as China.
But Transnet said on Monday that contingency plans were in place to soften the impact on businesses, stressing that its ports are made up of multiple terminals whose ownership varies.
“There are terminals that are owned by Transnet, and terminals that are owned by private sector operators. The current strike is between Transnet and its unions,” the utility said.
The two striking unions are demanding an increase of between 12% and 13.5% while the employer is offering an increase of between 3% and 4%.
In an attempt to break the deadlock, Nxesi is now part of the mediated talks after invoking a labour law clause that empowers him to direct the director of the CCMA to establish an advisory arbitration panel, in the public interest, to facilitate the resolution of the dispute.
Intervention
His intervention on Monday came after Transnet declared force majeure, a clause that allows it to back out of fulfilling its contractual obligations due to an unforeseen disruption. That prompted anxious calls from its clients for a speedy resolution to the impasse.
Transnet has declared force majeure several times since 2021, citing a range of issues from cable theft to a cyberattack — developments that risk undermining any effort to put an economy that has hardly grown and is bleeding jobs on a robust growth path.
Transnet is already operating below capacity because of a shortage of locomotives, poor maintenance, and vandalism and theft of its infrastructure, which has cost miners billions of rand in potential revenue because of throttled mineral shipments.
“The Minerals Council SA does not want the strike action at Transnet to compound the revenue losses our bulk mineral exporting members are already anticipating because of Transnet struggling to meet targeted tonnages,” head of communications Allan Seccombe said in an emailed response to questions.
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