Sibanye-Stillwater said its gold operations face a strike on Wednesday as two of the biggest unions failed to settle on a wage offer. Its shares dropped almost 5%.
While Sibanye, which is also one of the world’s largest primary producers of platinum, palladium and rhodium, has recorded bumper profits as commodity prices surged, it also has among the deepest and oldest gold mines, making them expensive to run.
A protracted strike risks depriving Sibanye of an opportunity to take advantage of a gold price that has surged above $2,000/oz, reaching the highest since August 2020.
The proposed action underlines workers’ discontent that they are not getting a greater share of the profits. The company last week smashed records with R33bn in income and handed investors R14bn in dividend payouts.
CEO Neal Froneman, who outlasted the unions in a five-month dispute in 2019 that led to a loss of about R1.6bn of production and cost employees as much as that in wages, said the company’s offer took into consideration inflation and the sustainability of the mines.
That argument did not sit well with the National Union of Mineworkers (NUM) and the Association of Mineworkers and Construction Union (Amcu). NUM acting general secretary William Mabapa confirmed that the unions served Sibanye with a 48-hour strike notice on Monday evening.
Sibanye’s gold operations account for about 7% of the company’s profit and employ about 31,000 workers.
The share price fell 4.7% to R70.56, while shares in AngloGold Ashanti and Harmony Gold rose at least 2.4%.
“It is very disappointing that the two unions have chosen this course of action despite our ongoing engagement in an attempt to reach agreement on wages since June 2021,” Froneman said on Tuesday. “Wage increases that are higher than inflation are not sustainable and cannot be considered.”
Froneman said the revised offer of a R700 increase and a R100 increase in the living-out allowance annually for three years for underground and surface workers, and a 5% wage increase for artisans, miners and officials over the course of the multiyear agreement, was final. It is equivalent to the upper end of SA’s inflation target of 3%-6%.
“Not only would strike action undermine employment and the livelihoods of many people who depend on the SA gold operations, but employees will gain little to nothing from it,” he said.
Amcu is no stranger to industrial action that drags on for months. In November 2018, it embarked on a five-month shutdown of Sibanye’s gold mines. Amcu eventually accepted terms that had been accepted by NUM, Solidarity and the United Association of SA (Uasa).
Uasa minerals and energy leader Franz Stehring told Business Day on Tuesday that the union is still “talking with Sibanye management” and is not party to the strike notice.
Amcu national treasurer Jimmy Gama said about 14,000 members would take part in the strike. He said those who criticised the union for embarking on a futile five-month strike from November 2018 did not understand the struggles poor mineworkers faced.
“This time around it’s not only Amcu members that are going on strike, but NUM members as well. We believe we have a strong force with which to fight this company,” Gama said.
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