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South Deep mine, Gold Fields'last operational asset in South Africa, concluded a three-year wage deal with trade unions NUM and Uasa last week. The agreement includes wage hikes of up to 8%. It remains to be seen if this will serve as a template for negotiations with other gold producers.
South Deep, a mechanised mining operation, has been first out of the door with a wage deal in recent years. It was hit in late 2018 by a sometimes violent strike by members of the National Union of Mineworkers (NUM), but unrest seems to have been nipped in the bud this year.
"The total increase of the settlement amounts to an average increase of 6.5% a year over the three-year period," mine owner Gold Fields said in a statement. South Africa's Consumer Price Index (CPI) was running at 4.4% in April but economists do not expect it to quicken past 6% this year.
Rank-and-file workers will get a raise of 8% in year one and, after that, 8% or CPI, whichever is higher. Miners, artisans and officials will get a 6% hike this year and, for the next two years, 6% or CPI if it is higher.
"Given the prevailing economic climate and the bullish commodity market, the settlement reached with South Deep Gold Mine through constructive engagements sets a benchmark for other mining companies," Franz Stehring, chief negotiator for Uasa, said in the statement.
It remains to be seen if this will be the case, with wage talks looming at Sibanye-Stillwater and Harmony Gold.
The NUM is demanding 15% across the board. Many of its members have several dependents and rising unemployment in the pandemic's wake means more mouths for a breadwinner to feed. And gold companies are generating good cash at the moment, with the precious metal's price fetching just shy of $1,900 an ounce, not far off its historic highs of over $2,000 scaled last year.
It also remains to be seen how the NUM's archrival, the Association of Mineworkers and Construction Union (Amcu), will approach the talks. Amcu members were burnt when the union launched a vicious five-month strike that ended in April 2019 with the union forced to accept the same wage deal at Sibanye that other unions had signed.
At Kusasalethu mine operated by Harmony — the scene of a vicious turf war in the past between the NUM and Amcu — the NUM claims it has been on a recruiting drive and said last week it had won recognition at the mine and been provided with office space there. This suggests Amcu's support in the gold sector may be ebbing.
But the NUM has also lost dozens of members who were dismissed for taking part in a wildcat strike at the rebooting Blyvoor mine, which was rocked by violence, including the murder of a director who was the leader of a rival union.
This all points to bubbling unrest in the gold sector, which has played an outsized role in the history of South Africa's political economy.
For Gold Fields, the lid on such unrest appears to be closed. The South Deep agreement means it can continue to focus on making the mine a profitable asset. Difficult geology has stymied past efforts to turn the mine around and more than R30-billion has been spent on it. At least for now, it looks like labour challenges won't compound those of nature.