Seeking an end to the 45-day strike in its South African gold mining operations, platinum and gold producer Sibanye-Stillwater last week upped its offer to R850 a month from the previous R700.
The two major trade unions – the Association of Mineworkers and Construction Union (Amcu) and the National Union of Mineworkers (NUM) – declared a strike on March 9 while holding firm to their demands for R1 000 a month.
Smaller unions Solidarity and Uasa accepted the previous wage offer on March 14. These smaller unions account for about 10% of the staff total in the gold operations.
The strike is likely to have cost workers close to R30 000 in lost pay. The trade unions have yet to meet with workers to review the offer.
Richard Cox, executive vice president for the group’s SA gold operations, says workers have lost a combined R990 million as a result of the strike. The fiscus has lost R113 million in pay-as-you-earn (PAYE) income tax and salary-related levies, while even more has been forfeited in other taxes and mining royalties.
Sibanye-Stillwater locked out roughly 30 000 workers at its South African gold mines in early March. If accepted, the latest offer will be extended to all employees in the bargaining unit irrespective of union affiliation.
The group’s final settlement offer proposes awarding Category 4-8 workers an increase of R850 for each of the next three years, while miner artisans and officials will receive 5% a year over three years.
The offer amounts to a 7.8% increase to the basic wage in year one, 7.2% in year two and 6.8% in year three for entry-level Category 4 employees.
Impact on costs
While other mining groups rode the commodity wave and agreed to fairly generous wage increases, Sibanye-Stillwater held out for a lower increase. The 2021 annual report explains the predicament the group finds itself in: it paid R26.2 billion in salaries and wages to employees in the 2021 financial year, up from R23.8 billion in 2020. That’s a 10% increase, more than double consumer inflation.
All-in sustaining costs at its SA gold operations jumped 8% in 2021.
This latest offer raises the wage bill at the group’s gold operations by R1.67 billion by July 1 2023 and excludes concessions made in respect of non-wage demands.
Locking in fixed costs like this, added to above-inflation electricity cost increases – the two primary costs in mining – impacts long-term mine sustainability.
Veteran miners know the hazards of stratospheric commodity prices. While profits barrel in the door, workers understandably want a cut.
It will not have escaped the unions’ attention that the group enjoyed a 50% increase in cash from its SA platinum and gold operations to R30.3 billion over the last financial year.
The danger is that mining is a cyclical business, and any multi-year agreement to escalate wages at levels higher than inflation will return to haunt corporate managers should commodity prices return to earth.
In a statement, Cox explains that the group decided to award some backpay to striking miners to assist them over the financial difficulties resulting from being locked out of work.
“Our offer is fair, takes into account inflationary living costs, considers the sustainability of the SA gold operations and is in the interests of all stakeholders. We urge employees to carefully consider the offer we have made and to ensure that their voices are heard.”
“Since Solidarity and UASA accepted our offer, they are no longer locked out. The financial difficulties being experienced are more a function of the strike than the lockout. The unions need to come to the party,” says James Wellsted, head of corporate affairs at the group.