Sibanye-Stillwater — the biggest employer in the mining industry— has made a final one-year wage offer of 5.5% to employees in its gold mining operations, describing this as a prudent measure in a difficult environment.
Workers have rejected the offer but are said to be wary of going on strike and losing wages when the no-work, no-pay principle is implemented.
In a letter addressed to unions, the group offered an increase of R880 or 5.5% to the lowest-paid entry level employees, miners and artisans, as part of a one-year term agreement. Officials were offered a 5.5% wage hike.
In the letter Bheki Khumalo, executive vice-president and head of group human resources at Sibanye’s southern Africa region, said the negotiations had been tough, given profitability had been hampered by high costs and lower volumes.
He said the group had stressed during the negotiations that its gold mines needed to implement tighter cost control and safely increase volumes to make it both profitable and sustainable. “The impact of high costs and low volume is negating the benefit from the current favourable gold price. For that reason, the company is proposing a one-year deal to ensure the short-term viability of the business and allow us to jointly explore opportunities to make it more sustainable,” he wrote.
The gold price has rallied this year, underscoring its status as a safe haven for investors amid geopolitical tensions and economic uncertainty.
It is unlikely that workers will go on strike, and the union hopes the facilitation by the CCMA will yield better results. The mood of the workers is that we must negotiate, and we must push and find a solution that will be suitable for them
— NUM spokesperson Luphert Chilwane
Sibanye’s profitability has been squeezed by lower platinum group metals prices that forced the group to reduce its workforce from 81,500 to just over 70,000 at the end of 2022, as it restructured loss-making assets.
The National Union of Mineworkers (NUM), said its members had rejected the offer. Spokesperson Luphert Chilwane said the matter has been referred to the Commission for Conciliation, Mediation and Arbitration (CCMA) for facilitation. Following a bruising three-month strike two years ago workers had little appetite for strike action, he said.
“It is unlikely that workers will go on strike, and the union hopes the facilitation by the CCMA will yield better results. The mood of the workers is that we must negotiate, and we must push and find a solution that will be suitable for them. There is no energy for workers to go on strike. The arrogance of Sibanye is on another level, there is no way that workers can consider a strike.”
Employees at Sibanye’s gold operations lost out on three months’ pay when they went on a prolonged strike in 2022. The strike ended with the signing of a three-year agreement and a “hardship allowance” to help manage their expenses.
Sibanye spokesperson James Wellsted said negotiations were at a sensitive stage, but the company had opted for a one-year agreement as profitability in the mining industry is under pressure worldwide from a decline in commodity prices, leading to many mine closures.
A year ago, Sibanye reviewed all its operations globally — due to the impact of lower metal prices, in particular PGM prices — to ensure it was able to withstand an extended period of low commodity prices. “This resulted in significant operational restructuring across the group, including at our South African gold operations to ensure their sustainability,” he said.
“The SA gold operations have not fully stabilised from the restructuring yet, and a one-year agreement with a fair but affordable increase was considered prudent and sensible under these conditions.”
Sibanye inherited its gold operations when it was spun out of Gold Fields in 2013, which at the time had an eight-year lifespan but has been operating for 11 years.
Gideon du Plessis, the general secretary at trade union Solidarity, said the union represents artisans and officials. “We are engaging with our members to try and get a mandate to accept the 5.5% offer”. He said this year Sibanye made a low final offer because they are not expecting a strike.
“It is an extremely difficult negotiation compared to the one we had earlier this year with Harmony Gold Company, which is operating under the same circumstances as Sibanye,” Du Plessis said.
In the six months ended June 2024, revenue from Sibanye’s gold operations in South Africa decreased by 6% to R11,614m ($619m), mainly due to lower volumes, while production was affected by the closure of Kloof 4 shaft in the second half of 2023 and increased seismic activity.
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