Wage negotiations get underway for South Africa's gold miners
South African labor unions representing more than 94,000 employees met with major gold mining companies on Monday to discuss wage increases and other employment conditions.
The talks involve Africa’s top bullion producers AngloGold Ashanti, Sibanye Gold and Harmony Gold as well as two smaller miners. Four labor unions, representing more than 80 percent of the country’s gold workers, were included in discussions on Monday, including the two largest -- the National Union of Mineworkers (NUM) and the Association of Mineworkers and Construction Union (AMCU).
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The NUM is reportedly seeking wage increases of 80 percent for entry level pay while the AMCU is demanding pay to more than double to US$1000 per month for entry level workers.
According to The Wall Street Journal, the average entry-level gold miners who works as deep as four kilometers underground makes just under US$495 a month.
The wage negotiations come at a time when the industry is grappling with struggling prices for the precious metal, falling production and rising operating costs. Union strikes could cause detrimental damage.
“We want to start a conversation with the leaders of organized labor and our employees that will lead to the sustainability of the gold industry for decades to come,” Graham Briggs, chief executive at Harmony Gold, said in a statement released by the Chamber of Mines.
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Last year, unions and platinum producers fought over wage increases resulting in a five-month strike, platinum output to drop 15 percent and South Africa’s economic growth falling two percent.
Gold companies can’t afford the same conclusion.
"I don't think the country can afford to lose jobs, but we can't afford to continue to operate at a loss," said Briggs.
“As leaders we need to place the viability and sustainability of our industry and the jobs it provides at the center of our discussions.”
The first round of negotiations will be held until Wednesday with three more days scheduled for next week.
Lithium producers bullish as EV revolution ramps demand
Rising demand for lithium is stoking prices for the electric vehicle battery metal, fueling long-delayed expansions that still may not produce adequate supplies that automakers need to meet aggressive production plans.
Growing industry optimism from higher lithium prices is a change from last year when funding for mines and processing plants dried up during the pandemic.
Albemarle Corp, Livent Corp and other producers are scrambling to make more lithium, but some analysts worry the recent price jump will not spur a big enough expansion to meet a planned wave of new EV models by mid-decade.
Since January, General Motors Co, Ford Motor Co LG Energy Solution and SK Innovation Co, along with other automakers and battery parts manufacturers, have said they will spend billions of dollars on EV plants.
U.S. President Joe Biden has proposed spending $174bn to boost EV sales and infrastructure. The European Union has similar plans, part of a rush to catch up with global EV leader China.
Those moves have helped an index of lithium prices jump 59 percent since April 2020, according to data from Benchmark Mineral Intelligence, a commodity pricing provider.
The rising demand “reflects what feels like a real and fundamental turning point in our industry,” said Paul Graves, chief executive of Livent Corp, which supplies Tesla Inc. On Monday, it said it would more than double its annual lithium production to 115,000 tonnes.
Graves warned, though, that “it will be a challenge for the lithium industry to produce sufficient qualified material in the near and medium term.”
Albemarle, the world’s largest lithium producer, aims to double its production capacity to 175,000 tonnes by the end of the year when two construction projects are complete. Albemarle's Q1 profit beat expectations thanks to rising lithium prices. Chile’s SQM, the No. 2 producer, said its goal to expand production of lithium carbonate by 71 percent to 120,000 tonnes should be complete by December.
Australia’s Orocobre is paying $1.4 billion for smaller rival Galaxy Resources, a strategy designed to boost scale and help it grow faster in regions closer to customers.
“The next few years are going to be critical in terms of whether there’s enough available lithium supply, and that’s why you’re starting to see commodity prices start to ramp,” said Chris Berry, an independent lithium industry consultant.
The price gains helped Albemarle and other major producers, including China’s Ganfeng Lithium Co and SQM, post big gains in first-quarter profit and boost forecasts for the year.
Even China’s Tianqi Lithium Corp, saddled with debt due to years of low lithium prices, signaled that recovering demand should help it swing to a profit this year.
Forecasts call for demand for the white metals to surge from about 320,000 tonnes annually last year to more than 1 million tonnes annually by 2025, when many automakers plan to launch new EV fleets, according to Benchmark.
Still, demand is expected to outstrip supply in 2025 by more than 200,000 tonnes, so lithium prices may need to rise to encourage producers to build more mines. That could boost the prices consumers pay for EVs. “Companies across the lithium-ion supply chain are in the best position they’ve been in for the last 5 years,” said Pedro Palandrani of the Global X Lithium & Battery Technology ETF , which has doubled in value in the past year.