UPDATE 2-S.Africa unions say coal, Amplats' strikes loom

Thu Jul 7, 2011 4:45pm BST

Quotes

   

* Unions seeking increases far above inflation

* In event of coal mine strike, Eskom has 41-day stock

(Recasts throughout with Amplats, background, details)

By Ed Stoddard

JOHANNESBURG, July 7 (Reuters) - South African unions on Thursday threatened strike action in the coal mining sector and against the world's top platinum producer, moves that may threaten the country's exports to resource-hungry Asia.

Africa's largest economy is also almost exclusively coal-powered, and energy supplies are tight, but utility Eskom has said it has enough coal in stock to last 41 days, so a strike would have to be lengthy to affect its operations.

A spokeswoman for the company said it had contingency plans but did not elaborate.

The unions will meet again with the coal mines, but the powerful National Union of Mineworkers (NUM) said it was no longer talking with Anglo American Platinum , the world's biggest producer of the crucial metal.

"The NUM took a decision not to continue with talks with the company ... and to proceed with consultation with members to ask for a mandate to strike action," the union said in a statement. Amplats declined to comment.

A strike at Amplats could threaten its 2011 production target of 2.6 million ounces and push up platinum prices.

Spot platinum was bid at $1,734.30 an ounce at 1450 GMT versus $1,721.60 at the previous close, extending earlier gains. Amplats' shares edged down 0.08 percent to 625.49 rand.

BAD BLOOD

Labour relations are badly strained in the mining sector in South Africa, which has by far the world's largest platinum reserves and is also an important gold producer. That is one reason mining shares here have in general underperformed their global peers.

NUM is pushing for an across-the-board wage increase from Amplats of 20 percent for the first year of what should be a two-year contract, while it said the company offered had offered 4.6 percent.

In the coal-mining sector, South Africa's Chamber of Mines said that three unions, including NUM which is the largest, have threatened to strike over wages.

The Chamber of Mines is negotiating on behalf of several coal miners including Anglo Thermal Coal SA , Exxaro , Optimum Coal and Xstrata Coal .

NUM is seeking a 14 percent raise from coal miners, about triple the inflation rate, while the chamber said it had raised its offer to 6 percent to the lowest paid workers and 5 percent for the rest.

The mining body and unions said they planned further talks on July 20 with a mediator.

Strikes also loom in the gold mining sector, which could bring South African production grinding to a halt in the world's third, fourth and fifth-largest producers: Anglo Gold Ashanti , Gold Fields and Harmony .

The wage demands are far in excess of inflation, which was 4.6 percent in May, but unions say the data do not capture the full impact of food and fuel price rises on the incomes of poorer workers, who often have several dependents.

The companies say that even with high commodity prices, they cannot afford such hikes as they grapple with other cost pressures.

Economists have warned that rising labour costs are eroding South Africa's status as an investment destination especially since its workforce is already more expensive and less productive than those found in many of its emerging market rivals.

(Additional reporting by Yumna Mohamed, editing by Jane Baird)

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