May 17, 2020

How will new pay demands from South Africa's AMCU affect gold mining firms?

Gold
South Africa
AMCU
AngloGold Ashanti
Admin
3 min
How will new pay demands from South Africa's AMCU affect gold mining firms?
South Africas Association of Mineworkers and Construction Union (AMCU), the second-biggest in the country, wants the pay wage for entry level workers in...

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.

Stay connected! Follow us on Twitter and like us on Facebook 

Check out the latest edition of Mining Global

 

Share article

May 11, 2021

Gerald Group resolves iron ore dispute with Sierra Leone

Gerald Group
SL Mining
Iron ore
Marampa iron ore mine
2 min
Gerald Group, the US commodity broker, set to restart iron ore shipments from Marampa mine with subsidiary SL Mining

Gerald Group, the US commodity trader, will pay Sierra Leone $20mn and cede a 10% stake in an iron ore project as part of the resolution to a nearly two-year dispute that led to the shutdown of production, the two sides revealed.

SL Mining

Gerald's wholly-owned subsidiary SL Mining filed for arbitration in August 2019 over a royalty payment dispute and suspended the Marampa mine the following month. Sierra Leone's government responded by cancelling its mining licence. 

As part of the agreement signed on Friday, Sierra Leone will take a non-dilutable 10% stake in a new company that will replace SL Mining and resume operations at Marampa by June 1, Gerald said in a statement.

Iron Ore

Gerald will make two $10mn payments this year and will have the immediate right to ship its current stockpile of about 707,000 tonnes of iron ore, it said.

Both sides will withdraw their legal claims before the International Chamber of Commerce (ICC) and International Centre for Settlement of Investment Disputes (ICSID), the statement added.

Gerald’s chairman and CEO Craig Dean commented: "I am delighted that we have been able to resolve our differences and have a fresh start and new beginning with the government of Sierra Leone."

SL Mining

Sierra Leone

Sierra Leone's Mines Minister Timothy Kabba told a news conference on Tuesday that the agreement was a milestone for the country.

"Whatever the pain we may have borne or dreaded throughout these two years ... this outcome justifies our action," he said.

Gerald estimates that Marampa holds about 1 billion tonnes of iron ore with a potential lifespan of 30 years.

Gerald Group

Back in 2019, Dean spoke with Mining about the development of Marampa and commented: "SL Mining offers a substantial opportunity for Gerald Group as our Marampa mine in Sierra Leone is set to deliver six million tonnes of high-grade iron ore during its operational life. If you analyse the iron ore market it has transformed, even from a couple of years ago when prices were very low. Now prices have stabilised we’re in a favourable position with our first shipments leaving for China.

"Our goal is to make ‘Marampa Blue’ an internationally recognised premium grade iron ore brand. We intend to expand the delivery of high-grade 65% iron ore concentrate to markets in Europe and Africa.”

Share article