How will new pay demands from South Africa's AMCU affect gold mining firms?
South Africa’s Association of Mineworkers and Construction Union (AMCU), the second-biggest in the country, wants the pay wage for entry level workers in the gold mining industry to double, despite the sector’s recent struggles.
AMCU President Joseph Mathunjwa told reporters Wednesday his union would seek a monthly wage of $1,050 for workers who currently earn roughly $500, along with housing benefits doubling as well.
• Related content: [REPORT] Gold Miners Face Likely Wage Cuts Following Platinum Strike
"The mineworkers are enslaved across the country. Whatever we put forward is to liberate the mining workers from this oppression," Mathunjwa said.
The union is also seeking improvement in benefits, including medical insurance and retirement packages.
“I’ve never seen any mineworker after leaving employment go and build a house based on the money he received” from the retirement scheme known as the Provident Fund, Mathunjwa said. “We haven’t started negotiating but all the components” are essential to daily life, not luxury living, he said.
The demand in pay comes at a time when mining companies are experiencing declining profits. The top bullion producers in Africa – AngloGold Ashanti Ltd., Sibanye Gold Ltd. and Harmony Gold Mining – say the pay hike would likely lead to the downfall of a besieged industry.
"We have to consider that up to 50 percent of gold production is either unprofitable or marginal," said spokeswoman for the companies Charmane Russell in reaction to AMCU's demands.
Last year AMCU rallied for a doubling of wages in the platinum sector, igniting a five-month strike that crippled output by the world’s three biggest producers. The two sides eventually settled for raises of 20 percent annually, but there have been ripple effects.
According to Reuters, platinum companies found the pay increase and long strike hard to swallow. Lonmin said last week it would cut 3,500 jobs at its South African mines.
The platinum strike also paved the way for new pressures for fresh wage agreements in the gold mining sector.
“Gold mining companies could face the biggest impact as they are at least as labor-intensive as platinum miners, but less profitable and with higher commodity price risks,” said rating agency Fitch Ratings.
“While the platinum miners' settlement could be used as a negotiating benchmark by unions in these sectors, labor costs for these companies tend to be a significantly lower proportion of total costs. However, if the length of the platinum miners' strike – around five months – were also to be repeated in other sectors, the disruption caused would have a much more significant impact.”
The AMCU represents about 29 percent of the 94,500 employees at AngloGold Asahnti Ltd., Sibanye Gold Ltd. and Harmony Gold Mining.
AngloGold Ashanti establishes BG Umoja JV in Tanzania
AngloGold Ashanti, in line with it s strategy to ensure a sustainable contribution to the economies of host countries, has established the BG Umoja joint venture (JV), in Tanzania.
Awarded a $186m two-year mining contract for the Nyankanga and Geita Hill underground mining projects, the 80/20 joint venture is a partnership between Africa Underground Mining Services (AUMS) Tanzania, a subsidiary of Australia’s Perenti Group, and local drilling services and mining- supply company, Geofields Tanzania Limited.
The partnership is modelled on a similar underground mining joint venture at the Company’s Obuasi Redevelopment Project in Ghana between AUMS Ghana and Accra-based, wholly Ghanaian-owned Rocksure and will help build local specialised mining capacity.
“We’re working with our experienced mining contractors to assist in establishing local joint ventures for long-term transfer of sustainable skills, and to continue building on our sustainable local procurement programmes,” commented Sicelo Ntuli, AngloGold Ashanti’s Chief Operating Officer: Africa.
“AngloGold Ashanti is building sustainable local procurement programmes that will allow it to stimulate economic and social development at all of its operations, evidenced by the significant contribution Geita has made to the fiscus and people of Tanzania.”
AngloGold Ashanti’s annual expenditure with indigenous Tanzanian suppliers has almost tripled to $162mn since 2016. The company’s local team in Tanzania has set itself an ambitious target of 60% to 70% of all expenditures with indigenous Tanzanian companies, by 2025.
Scope 3 Emissions
In addition, AngloGold Ashanti’s Geita Gold Mine has awarded a two-year fuel transportation contract, worth approximately $10.8m a year, to two local contractors - one of which is originally from Geita. This is in line with the mine’s commitment to contribute to the economies of host communities. The Geita-based company was part of Geita Mine’s supply chain capacity building initiative for host community suppliers, a partnership between the Mine and the National Economic Empowerment Council.
To influence Scope 3 emissions, trucks are to be compliant with EURO IV emissions standards, tankers are to be made of an aluminium alloy material to reduce weight and the age of the fleet will be maintained at less than six years.
Diversity & Inclusion
The contractors already employ women fuel tanker drivers, fulfilling the Mine’s requirements for diversity and inclusion. The two contractors both own workshop facilities in Geita town and participate in social initiatives aimed at uplifting the lives of host community residents.
AngloGold Ashanti has been operating at Geita Gold Mine for more than 20 years, with the project initially a single pit mine, evolving now to a predominantly underground operation, employing 5,700 employees and contractors.
Earlier this year, the Government of Tanzania recognized AngloGold Ashanti’s contribution to the economy of the country, awarding it for its outstanding performance in a number of areas, including environmental and safety performance, corporate social investment, the best taxpayer in the mining sector, the runners up in local business content and overall best performer in the mining sector in Tanzania in 2019/2020.
Geita Gold Mine
Geita, one of AngloGold Ashanti’s flagship mines, is located in north-western Tanzania in the Lake Victoria goldfields of Mwanza region, about 120km from Mwanza and 4km west of the town of Geita. It has been in operation as a large-scale mine since 2000.