Gloves Off In Gold

Published 8 years ago
Gloves Off In Gold

The Birchwood Hotel in Boksburg was an apt choice for these talks for two reasons: firstly, Boksburg is a mining town built on the digging of gold; secondly, it is a venue for boxing and home to former world heavyweight champion Gerrie Coetzee. The Friday before gold mining pay talks began in earnest, on June 16, there was a boxing tournament at Birchwood. At least the Friday fight night was fought under Queensberry rules.

The Association of Mineworkers and Construction Union (Amcu) led with its left. It may be merely the second largest union, representing 30% of the 93,000 gold miners compared to the majority National Union of Mineworkers’ 54%, but what it lacks in numbers it makes up for in chutzpah.


“We are a serious union,” says Manzini Zungu, the spokesman for Amcu.

When the major gold producers in South Africa, the leading gold producer in Africa, made one of the best opening offers in history on July 6 – of between 7.8% and 12.96% – Amcu was the first to despise it. To rub salt in the wounds, in rejecting the offer, Amcu presented slides showing the salaries of the top mining bosses, of up to $1.7 million a year, juxtaposed with the salaries of underground miners.

“That was brilliant,” says an official from a rival union as he emerged impressed from the negotiating room.

“You can’t compare a CEO to a man who carries a shovel,” scoffed another.


Amcu put pressure on the gold employers to make a counter offer two days later. The employers stuck to their guns and Amcu deadlocked on July 8, taking a dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA), the independent arbitration body. It was enough bad news to drive the value of mining stocks down by 10% on the day on the Johannesburg Stock Exchange.

The next step is a strike and Amcu proved, in 2014, this is not too difficult. In that year, the union took the platinum mines out for an unprecedented five-month stoppage that cost more than $2 billion.

“The problem is the employers fear Amcu,” says a former member of the NUM negotiating team.

The rest of the unions, NUM, UASA and Solidarity, stayed at the negotiating table but are equally disgruntled.


How the gold employers are going to close the gap, with pay demands that go up to 80% from NUM to 100% from Amcu, is anyone’s guess.

The employers plead poverty. Figures released by the Chamber of Mines show the demands would load R16.5 billion ($1.32 billion) onto the wage bill of South African gold mines. The wage bill, in 2014, was R23.5 billion ($1.88 billion), making up 55% of gold mining costs.

“If all of the wage demands are granted, nearly all of the mines in South Africa would be under water. It could be the end of the gold mining industry,” warned Elize Strydom, the chief negotiator for the employers.

The employers also set great store by what it calls social compact – a package of pensions and welfare benefits to complement the pay. Like the opening offer, this too fell on stony ground.


“We don’t want packages, we want pay,” says David Sipunzi, the general secretary of NUM.

The employers also tried to link a pay deal to profit share if the gold price goes up. They promise there will be bonuses if profit margins, after costs have been deducted, stay above 6%. Clearly, there will be talk about retrenchments and pay cuts if profits turn to losses.

“Will the bosses take a pay cut?” asks one of the more cynical officials at the talks.


The unions’ argument is simple. They want to use these talks to close the pay gap between the boardroom and the bottom of the damp shafts, miles underground where the gold is.

You could argue that a secretary answering a telephone in an air-conditioned office in Johannesburg earns twice as much as a miner who spits and sweats in the clammy heat, more than four kilometers underground for as little as $600 a month.

Amcu and NUM also want to close what they call the “apartheid gap” in pay – a legacy from the old days when the cheap labor of black miners made vast profits for both the mines and the state.

“We don’t fear the threat of retrenchments made by the employers, they are retrenching at Doornkop (a Harmony Gold mine) as we speak,” says Sipunzi.


Analysts have warned rising costs and falling productivity in the gold mines could cost the industry 20,000 jobs before the end of the year. The number of workers in the gold mines has fallen from 180,000, 10 years ago, to a mere 120,000, an alarming decline in a nation that has mined nearly half of all of the gold in the world.

The only jab in the eye for Amcu so far is its dismal attempt to boost its numbers represented at the talks. It claimed an extra 6,500 members, but independent auditors say 6,000 of those could not be verified. A source among the employers says of the 1,000 members claimed at AngloGold Ashanti, a mere seven turned out to be true.

What is clear is that whichever of the two main unions, Amcu and NUM, is seen to get the best deal in these talks will attract a legion of new members to their corner. Seconds out.