S. Africa’s Gold Miners Strike

South African gold miners launched their first industrywide strike in 18 years Sunday to demand higher wages, the country’s main mining union said.

“I can say now that the strike is on,” said Gwede Mantashe, general secretary of the National Union of Mineworkers. “All the workers who were due to go on the 6 p.m. shift are out.”

Around 100,000 gold miners represented by the union would remain on strike until a solution was found, he said.

The strike was affecting all four companies that had been involved in failed wage talks, Mantashe said.

Despite improved offers from two producers, last-minute talks failed to yield a deal, said an official from the Chamber of Mines, which negotiates on behalf of gold producers.

Mantashe had earlier said that even if any better wage offers were forthcoming, it would be too late to call off the strike.

South Africa is the world’s biggest producer of gold bullion, accounting for 15% of the global industry’s output. The country’s mining sector accounts for 8% of the nation’s gross domestic product.

A strike would lead to the loss of daily production of about 28,000 ounces of gold production and daily revenue of $12.21 million, a Deutsche Securities analyst has estimated.

The failed wage talks are symptomatic of wider discontent in a country plagued by huge income gaps between the poor, who are mostly black, and the rich, more than a decade after the end of apartheid. Recent weeks have seen a wave of work stoppages by city workers and supermarket clerks and a six-day stoppage by employees of the national airline.

Two unions called the mining strike after rejecting the Chamber of Mines’ latest offer of a 4.5% to 5% wage rise plus bonus payments. The Solidarity union, with about 10,000 members, is set to join the strike just before midnight today, and a third union, with 15,000 members, is to decide today whether to take part.

The unions are demanding a wage increase of 10% to 12%.

Wages make up about half of total costs in the labor-intensive sector, the biggest in terms of mining employment.

The strike would paralyze the South African mines of the world’s No. 2 gold producer AngloGold Ashanti Ltd., fourth-ranked Gold Fields Ltd., sixth-placed Harmony Gold Mining Co. and South Deep, a joint venture of South Africa’s Western Areas Ltd. and Canada’s Placer Dome Inc.

In 11th-hour talks, AngloGold and South Deep offered wage hikes of between 5.25% and 6.5%, the Mineworkers union said. The union said it would seek the views of its members on the new offer and respond today.

Frans Barker, head negotiator for the Chamber of Mines, said: “There was some informal contact between AngloGold and South Deep and the [Mineworkers union], but there was no agreement.”

He added: “If the strike goes on for too long, the country will start feeling the impact, especially on its export account.”

Miners, who descend nearly 2 miles underground to drill ore in sweltering narrow tunnels, typically earn $387 to $464 a month.

Mantashe said the union could consider a wage increase of between 7% to 8%, but such an offer would have to include improvements including higher allowances for workers living outside the gold companies’ hostels.

Mining firms, which agreed to give workers a 10% wage increase two years ago, say they cannot afford increases much above inflation, which is running at less than 4%.