Strife, job cuts seen for South Africa mines - group

JOHANNESBURG/CAPE TOWN Fri Nov 23, 2012 5:15pm GMT

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JOHANNESBURG/CAPE TOWN (Reuters) - South Africa's strike-battered mines sector could see thousands of job cuts and further violent clashes between rival unions, the national mining industry group warned on Friday.

The last of South Africa's recent crippling wildcat strikes ended last week, after leaving more than 50 dead and temporarily halting mining output in the continent's top economy.

But the three months of often violent unrest have poisoned industrial relations and the union turf war that sparked the strikes shows signs of flaring up again.

Two workers at a Harmony Gold mine near Johannesburg were killed on Thursday in a clash between the once-dominant National Union of Mineworkers (NUM) and the smaller Association of Mineworkers and Construction Union (AMCU).

That violence is likely to continue, said Bheki Sibiya, chief executive of the Chamber of Mines, the group that represents the industry.

"What is happening at Harmony is a continuation of what we have observed," he said at the Cape Town Press Club.

"I think we are still going to observe quite a bit of it before it settles."

He also warned that the strike-hit industry will likely need to shed thousands of jobs, sobering news in a country where unemployment hovers at around 25 percent, and the wealth disparity is among the most glaring in the world.

"There are going to be retrenchments in the first quarter of 2013.... It is probably in the thousands, possibly going above ten (thousand) and maybe higher."

Harmony, South Africa's third-largest bullion producer, said on Friday operations at its Kusasalethu mine 65 kilometres west of Johannesburg had not been affected by the violence that left two dead.

Spokeswoman Henrika Basterfield told Reuters there were no further reports of violence at the mine.

UNION TENSION

Analysts say the tension between AMCU and the NUM, which has had its dominance challenged by the smaller union, is likely to rumble on.

AMCU charges that the NUM, with its connections to the ruling African National Congress, has lost touch with the needs of average workers, who still live in grinding poverty.

The labour strife and the resulting deaths - including 34 striking miners shot dead by police in a single day in August - have dented the image of the ANC and President Jacob Zuma as they prepare for a party leadership election next month.

Despite criticism that his government mishandled the mines crisis, Zuma is widely expected to keep the ANC presidency.

But this week's trouble at Harmony was unlikely to be a "one-off" event, said Loane Sharp, a labour economist at staffing firm Adcorp.

"For as long as the causes of the protests and unrest are not addressed, the mining sector will remain vulnerable to these sorts of actions by workers," Sharp said.

"I am referring to the labour law and regulations that promote the larger trade unions and exclude the smaller ones."

South Africa's labour laws make it difficult for smaller unions to participate in labour negotiations.

Harmony Gold chief executive Graham Briggs said AMCU had applied for recognition at the company.

LOWER GROWTH

Mass job cuts in mining are likely to further strain South Africa's battered economy. The pace of economic growth probably halved in the third quarter, according to a Reuters poll, after the strikes hit mining output.

Gross domestic product (GDP) probably grew at 1.5 percent in the quarter, from 3.2 percent in the previous three months, according to the median forecast in a poll of 15 analysts.

"The slowdown has largely been a result of the mining sector strikes, which have caused output levels in the sector to plummet," said Shilan Shah of Capital Economics.

Mining accounts for 4 to 6 percent of South Africa's GDP.

The strikes have also battered the rand currency, which has depreciated by about 11 percent against the dollar this year and touched a 3-1/2 year low this week.

Central bank governor Gill Marcus on Thursday cautioned that the fall-out from the strikes was far from over.

"While many of the strikes appear to have been resolved, long term resolution of the underlying causes requires ongoing, concerted action on the part of all the parties involved," she said.

(Additional reporting by Sherilee Lakmidas and Vuyani Ndaba; Writing by David Dolan; Editing by Pascal Fletcher and Jason Webb)

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