* Minister sets up group to look into retrenchments
* High wage increases could harm sector - Harmony Gold’s CEO
* 79 pct of mining firms comply with empowerment ownership (Adds Harmony Gold CEO, Chamber comment)
By Zandi Shabalala
PRETORIA, May 14 (Reuters) - South Africa’s mines minister said on Thursday he was alarmed at the rate of retrenchments in the mining sector and would set up a committee to look into the job losses.
South African mining industry profits are under pressure from softer metal prices, strikes and rising costs.
Platinum producer Lonmin said last week it would cut 3,500 jobs at its South African mines through voluntary processes, adding that forced job cuts would be a last resort.
“We are alarmed at the rate of which retrenchments have been taking place in the industry. As stakeholders we understand well the impact of job losses on the economy,” Mines Minister Ngoako Ramatlhodi told a news conference in Pretoria.
The Chamber of Mines will not participate for now in the committee set up by the minister, its president Mike Teke said.
In 2012 the mines ministry fiercely opposed job cuts by Anglo American Platinum, calling this a betrayal of trust.
Harmony Gold said it would also cut jobs and other bullion producers have warned that high wage demands could lead to the decline of an industry facing dwindling profits.
“We are in a lean, difficult time as an industry. I‘m sure those who are negotiating will also be alive to the situation we are operating in,” said Ramatlhodi.
The Association of Mineworkers and Construction Union wants basic pay in the gold sector to be more than doubled, while National Union of Mineworkers seeks increases of around 75 percent.
“I don’t think we should be unduly alarmed at the wage demands; they are opening shots,” the minister said.
Harmony Chief Executive Graham Briggs told Reuters high wage increases would prevent the industry from fully recovering.
“Right now we have our backs towards the walls,” he said. “We can’t just roll over and accept something we can’t afford.”
Ramatlhodi said 79 percent of mining companies have complied with the government target of having a 26 percent stake of operations owned by blacks, but 45 percent of companies had not improved living conditions for its workers.
South African companies are required to reach at least 26 percent black ownership under the government’s policy of black economic empowerment, designed to address the inequalities of the apartheid system that ended in 1994.
Mining companies in South Africa have been scrambling for years to meet the targets, in a sector Ramatlhodi said is still dominated by white males in leadership positions. (Writing by Peroshni Govender; Editing by James Macharia/Mark Heinrich)