JOHANNESBURG: South Africa's National Union of Mineworkers (NUM) gave gold mining companies seven days on Saturday to meet its demand for pay rises of up to 60 percent or face strike action.
NUM, the main mining union, walked out of deadlocked wage talks with the companies on Wednesday, setting the scene for a gold industry shutdown that could cost Africa's largest economy over $35 million a day in lost output, based on current spot prices of the metal.
South Africa's economy is already losing $60 million a day to a week-old strike in its auto sector. A stoppage would hit major producers such as AngloGold Ashanti, Gold Fields and Harmony.
"You are given only seven days to respond positively to our demands, failing which we would be left with no option but to resort to lawful industrial actions," the NUM said in a memorandum presented to the chamber of mines after around 3,000 of its members marched through downtown Johannesburg.
A wave of violent wildcat strikes in the mines last year, rooted in a turf war between the NUM and the rival Association of Mineworkers and Construction Union (AMCU), dented economic growth and led to downgrades of the country's sovereign credit ratings.
President Jacob Zuma and his ruling African National Congress party, criticised for their handling of the crisis last year, are keen to avert a repeat of such stoppages ahead of elections in 2014.
South Africa's gold industry, which once accounted for almost 80 percent of global bullion output, is in a state of steep decline and the country now produces just 6 percent of the world total.
The companies, squeezed between rising costs and falling prices, say they can ill afford the union pay demands.
But the mostly black mining workforce is in a restive mood as it seeks a bigger share of the spoils from an industry that was built on low wages and migrant labour during apartheid rule which ended in 1994.
The union rivalry has led to the deaths of more than 60 people in the last 18 months and made the NUM, a key ANC political ally, more militant and uncompromising, though it is still following legal channels as it gears up for strike action.
"We are ready to bring the economy to a standstill," said the NUM, whose 90,000 members in the construction sector plan to down tools on Monday in a separate protest.
The NUM wants pay rises of 60 percent for entry-level miners, about 10 times the inflation rate. The companies' latest offer is 6 percent.
AMCU and the Solidarity trade union which represents skilled labour are still in wage talks with gold producers but NUM is the main union in the sector, representing about 64 percent of the workforce.
NUM said its demands stemmed from "the financial realities of rising food prices, transport, school fees, and most importantly a declining standard of living" of its members.
Wage increases for miners have outpaced inflation the past decade but they have come off a very low base and the typical worker in the sector has eight dependants, many of whom live in rural areas far from the shafts, so the pay increases do not go very far in their households.
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