The long pay strike by two of the largest unions at Sibanye-Stillwater, one of the world’s leading producers of precious metals, may mean the group misses out on the commodity price boom as gold production has ground to a halt.
The strike enters its third week on Wednesday.
The group’s gold mines, which account for 7% of group profit and employ about 31,000 workers, have been closed since March 9 when members of the Association of Mineworkers and Construction Workers (Amcu) and the National Union of Mineworkers (NUM) downed tools to demand above-inflation increases.
The group responded with a lockout and a policy of no work, no pay since March 10, a decision that has seen workers lose more than R400m in pay.
“There has been no production since. Although it is premature to attribute accurate numbers to production losses for the past two-and-a-half weeks, Sibanye-Stillwater has published production guidance for the year of between 813,000oz and 873,000oz for 2022,” Sibanye spokesperson Memory Johnstone told Business Day.
The company could lose at least 67,750oz if the industrial action goes for a full month.
A long strike could deprive Sibanye of an opportunity to take advantage of a gold price that jumped from a low of $1,782 at the beginning of 2022 to $2,070, the highest since August 2020.
The sector contributes about 9% to GDP, with about 450,000 people employed directly by the industry.
In his budget speech in February, finance minister Enoch Godongwana underscored mining's role in the economy, saying the government estimated tax revenue for 2021/2022 to be R1.55-trillion, which was “R62bn higher than our estimates from four months ago and R182bn higher than our estimates from last year’s budget”.
“This positive surprise has come mainly from the mining sector due to higher commodity prices,” Godongwana said.
Johnstone told Business Day that by March 28 the government had lost about R50m a day in PAYE income tax and salary-related levies, and “significantly more in lost taxes and mining royalties”. Employees had lost about R440m in basic wages and “more” in other benefits, she said.
Amcu’s five-month strike from November 2018 at Sibanye’s gold operations cost the company R1.6bn and lost production of 110,000oz of gold, while nine people died.
Workers forfeited R1.5bn in pay during the industrial action after which Amcu accepted terms that had been accepted by NUM, Solidarity and Uasa.
Amcu national treasurer Jimmy Gama told Business Day the strike’s effect on gold production is “severe because production is in a complete halt”.
“Nothing is happening since all workers are participating in the strike action,” he said.
Workers affiliated to the two smaller unions, Solidarity and Uasa, however, were not participating in the strike and were not locked out. They accepted Sibanye’s revised wage offer that resulted in surface and underground workers getting a R700 pay rise and a R100 increase in the living-out allowance each year for three years, and a 5% pay increase for artisans, miners and officials over the course of the multiyear agreement.
Johnstone said: “Sibanye-Stillwater is planning to partially resume production utilising these employees in due course.”
Sibanye has vowed to keep the lockout in place until Amcu and NUM accept its revised wage offer.
The two unions, with a combined membership of about 25,000, have not moved on their demands for an increase of R1,000 a month for the lowest-paid employees and 6% for miners, artisans and officials, which is above the 4.9% inflation rate forecast for 2022. They are also demanding a R100 increase in the living-out allowance, which takes their pay demand to R1,100 each year for three years.
But Gama said the strike will continue. “The demands are still there, no changes until the employer responds to them,” he said.
The company has said the demands were unreasonable and would jeopardise the sustainability of its gold operations and affect all stakeholders, particularly employees.
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