Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
South Africa’s President, Jacob Zuma, called the country’s mining sector to seek a resolution to its ongoing labour disputes after official figures released Thursday showed the nation’s economic growth hit a fresh low.
Between January and March, the country’s economy grew by just 0.9%, compared with the previous quarter, data from Statistics South Africa show.
Growth of gross domestic product (GDP) slumped below expectations from 2.1% at the end of last year, with a 1.2% fall of output from the manufacturing industry.
The “recovery has not been as strong as needed,” Zuma told reporters, according to Bloomberg. “Without faster growth we cannot succeed in reducing unemployment, poverty and inequality.”
He added the country, the continent’s biggest economy, needed a stable and growing mining industry, which directly accounts for 6% South Africa’s gross domestic product (GDP) and 18% indirectly.
The sector was hit by a crippling wave of unrest in 2012, triggered by police shooting dead 34 protesters at platinum giant Lonmin (LON:LMI) during an illegal wage strike.
This year, as the wage bargaining season begins, one union has demanded pay hikes of up to 60% for some workers.
“We call for fair and expeditious settlements of wage negotiations that can contribute to the attainment of the country’s job creation and job retention goals,” Zuma said.
He emphasised that the government does not take a “stance or sides” when dealing with the unions, adding that strikes are a part of any democratic country and that they should not be seen as a problem.
Several of the country’s mining companies have been meeting with unions this month to set a new wage pact, which will replace a two-year agreement that expires in June.
Unions have said they would push for a double-digit increase in their members’ wages, while executives have warned a new wage of protests may come given the substantial cuts that mining companies, such as Anglo American Platinum (Amplats) and AngloGold Ashanti (NYSE:AU), are planning.
