Gold miners in South Africa are in their second day of a strike, and a resolution does not appear near. In fact, more unions might join the 10,000 workers already striking.
There has not been an industry-wide strike in the nation since apartheid, but with the largest labor union on strike — The National Union of Mineworkers — the affected companies, which include Anglo-Gold Ashanti Ltd. and Gold Fields Ltd, are facing a total of 130 million rand — $20 million — a day in lost revenue.
The issue? A seven to eight percent pay increase, which the industry says it can’t afford.
“These are unaffordable increases and will definitely result in a prolonged strike if they’re serious,” Harmony Gold chief executive Bernard Swanepoel told investors at a presentation in Johannesburg. “The industry can’t afford a prolonged strike, but I’m certain it can’t afford unaffordable increases.”
The South African gold industry generates one-sixth of all the gold in the world.
One company offered to raise salaries by up to 6.5 percent, while another company has also upped its offer. According to Bernard Swanepoel, AngloGold’s offer to increase employees’ pay between 5.25 and 6.5 percent was in direct breach of an agreement made.
While Swanepoel notes that this would “play into the union’s hands,” AngloGold feels they have done nothing wrong.
“There is an agreement to stick together as long as possible,” Robbie Lazare, head of AngloGold’s South African operations said. “It’s also responsible to try and avert the strike or end the dispute.”
Pay concerns are affecting companies across the board in South Africa. Chrome workers are also currently on strike, while coal and platinum miners are threatening to strike as well.
Despite only being in the second day, the strike is affecting the price of gold and shares in the involved companies. Shares in one company have dropped 3.2 percent, while others have fallen between one and three percent.
The price of gold dropped to $434.70 yesterday from $438.20.
Should you worry about your gold investments? Of course not — this is a short-term hiccup in a long-term holding, not to mention it presents a great buying opportunity to either accumulate or initiate positions in this booming industry.