It’s a new ball game for mining

2012-11-17 09:52

Industry is slowly coming to terms with the post-Marikana reality, writes Andre Janse van Vuuren

Anew set of rules governing industrial relations in the mining sector is steadily being forged as companies try to come to grips with the industry’s changed realities post-Marikana.

Bruised by the strikes that have shut down major gold and platinum shafts for more than a month, the sector’s top officials have accepted that new dynamics have forever changed the way in which the industry manages its human resources.

“The recipe of the past 25 years is no longer valid,” said Harmony Gold chief executive Graham Briggs when the company released its financial results for the September quarter earlier this month.

He was referring to the emergence of the Association of Mineworkers and Construction Union (Amcu), a new rival to the dominant National Union of Mineworkers (NUM), which has made inroads at Harmony’s Kusasalethu mine.

“Having another union in the boardroom is not necessarily bad,” Briggs said. “It’s not a negative, only different.”

He didn’t elaborate on the extent of Amcu’s presence at the mine, except to say it was “significant”. The group is currently verifying the authenticity of Amcu’s membership claims to determine whether the union has surpassed Harmony’s 30%-plus-one recognition policy.

Harmony was one of the major gold producers to be spared the worst in the spate of unprotected strikes that erupted in the wake of the Marikana killings at Lonmin in August and the 22% wage increase settlement that followed.

The Kusasalethu mine on the West Rand was Harmony’s only affected asset, but it still incurred a loss of R200 million in costs and an estimated R125 million in lost profits.

The deal brokered to end the strike, adjusting the salaries of entry-level workers, added R10 million to the company’s wage bill.
South Africa’s biggest gold producer, AngloGold Ashanti, felt the full brunt of the strike, which it says claimed 250 000 ounces of gold in lost production – the equivalent of R3.8 billion in revenue at current prices.

The company has not been formally approached by Amcu for recognition at any of its mines, but chief executive Mark Cutifani said the group would recognise any party that wished to speak on behalf of workers within the ambit of the Labour Relations Act.

“Our requirement is that you follow the rules and you’ll be fully respected,” Cutifani said. “If people have to re-elect representatives, we will support them in that process, but we can’t have 27 different groups voicing an opinion, and still expect us to react in an appropriate and constructive way.”

The Chamber of Mines has also since admitted to some of the industry’s shortcomings in dealing with workers, saying it was to an extent guilty of leaving its responsibility to engage with employees in the hands of unions.

“One important thing we’ve learned was engagement,” chamber vice-president Mike Teke said following the election of the organisation’s office bearers earlier this month. “We’ve learnt we cannot take for granted the things our employees need and the things they want.”

The view was echoed by the chamber’s second vice-president, Anglo American executive director Khanyisile Kweyama, who said companies have realised “the old way of dealing with employees has changed”.

“While our employees are members of unions, they remain our employees as well,” she said. “We need to hear what they say and we need to acknowledge what they say.”

NUM general secretary Frans Baleni said the consequences of mining companies neglecting continuous interaction with workforces were that emotions boiled over when talks over wages and working conditions took place.

“That’s when you see expectations from both sides are worlds apart and that makes it much more difficult to find common ground,” Baleni said.

Cutifani, who is also the chamber’s newly elected president, said a stronger foundation in labour relations would be critical to steer the industry through some likely mine closures and job cuts as a consequence of the strikes.

AngloGold, for instance, has already announced a full review of its South African asset base. Anglo American Platinum embarked on a similar process long before the strikes commenced. It is due to announce the outcome of the review before the end of the year.

There is fear that the negative impact on jobs will be harder than what would’ve been the case prior to the strikes. The company’s Rustenburg operations have now been shut for more than two months.

“I think it’s going to be a tough year across the industry,” said Cutifani. “In platinum, around 50% of operations are losing cash. The gold industry is also finding it tough, with grades declining.

“What we need to do is come together, talk it through and decide on the right way, and make sure we continue to create a stable basis for the future of the industry. If we don’t navigate this properly, none of us will be able to live with the consequences.”

The prospect of closing down shafts and job cuts have also given new urgency to a proposed strategy for employers in the gold sector to seek to increase productivity levels at their mines. Called the “Sondisa process”, the sector is seeking to get more out of assets without requiring employees to necessarily work longer hours.

Members of a task team were supposed to visit Brazil on a fact-finding mission in August and September, but the trip was cancelled in the wake of the strikes.

“South Africa works its mines 274 days of the year; our competitors work their assets 365 days of the year,” said former AngloGold Ashanti executive Robbie Lazare, who is responsible for leading the process.

“It’s a tremendous opportunity to increase productivity and cause some job creation within the industry. Rationalisations that come from the unprotected strikes should try to be offset by the Sondisa process.”

Baleni said the NUM was involved in the process and would support it if it did not take place to the detriment of workers.

“We’re going into this with our eyes wide open,” he said. “If it prolongs the life of mines without compromising working conditions, we will support it.”

– miningmx

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