Minews - Wage talks begin in ailing South African gold sector

(Minews) - Wage talks between South African bullion producers and unions started on Monday, with both sides far apart, setting the stage for protracted wrangling in the ailing industry.

The talks, which involve AngloGold Ashanti, Sibanye Gold Harmony Gold and two smaller producers, come at a time when the sector is grappling with depressed prices, falling production and rising costs.

"We need to place the viability and sustainability of our industry and the jobs it provides at the centre of our discussions," Harmony chief executive Graham Briggs said.

In labour's corner stand four unions representing 94,000 miners. The two biggest, which are arch rivals, have submitted demands ranging from 80 percent to over 100 percent for the lowest-paid workers.

Investor jitters about the talks were underscored on Monday as Johannesburg's Gold Mining Index dropped almost 5 percent. Bullion's spot price also fell, slipping back below $1,200 an ounce, a critical level seen key to maintaining the profits of many marginal mines.

In a departure from past practice, the talks are beginning with neutral chairpersons who will act as facilitators.

Another departure is an industry proposal to offer labour an "economic and social compact" or a welfare package which it says is needed to keep the shafts profitable while providing for the welfare of miners.

The Chamber of Mines said last week this would include proposals to share the gains of a rising gold price with workers while also sharing the pain of price declines. Propoals on housing, retirement benefits and employee debt will be included.

But union leaders have publicly poured water on the intiative, saying they only want to talk money.

The first round of talks will be held until Wednesday and will see the different parties presenting their positions. Three more days have been scheduled for next week.

David Sipunzi, newly elected head of the National Union of Mineworkers, the biggest gold union representing over 50 percent of the sector's miners, defended demands for wage hikes of 80 percent on Sunday, saying miners were still being paid "apartheid wages."

Labour militancy has been on the rise, spurred by perceptions that, two decades after apartheid's demise, wages remain too low.

But South Africa's gold industry is in trouble. According to the Chamber of Mines, costs between 2008 and 2014 rose on average by over 20 percent per year. Production over the past decade has declined by almost 8 percent annually.