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Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

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Will 13% Be Enough To Save This Key Gold Production District?

The South African mining sector is no stranger to labor unrest. With a six-month strike in the country’s platinum industry last year having reduced output by 1.2 million ounces.

And now the gold mining business is facing the same threat.

Negotiations between South African gold miners and the country’s four biggest mining unions reached a near-climax on Friday. With the country’s largest gold producers extending what appears to be a final offer to workers. Related: A Reality Check For U.S. Natural Gas Ambitions

That includes offers from AngloGold Ashanti and Sibanye Gold to raise monthly pay for entry-level workers by 1,000 rand (about $80) yearly for the next three years. Harmony Gold Mining offered a 500-rand rise in annual pay.

In total, that amounts to about a 13% rise for AngloGold and Sibanye employees in the first year. And an 11% increase for Harmony Gold workers.

South Africa’s four major mining unions will have this week to respond to the offer. With these decisions being critical for the future of the gold sector here. Related: Top 6 Myths Driving Oil Prices Down

The two sides still appear to be a ways apart on demands. With the unions having previously requested a 60% rise in wages.

Representatives from the country's largest union, the National Union of Mineworkers, said they were “disappointed” with the latest round of offers. But executives from Harmony said it was “extremely likely” that the unions would accept the deal, given the current depressed state of the gold business.

The outcome of the union decisions on the offer thus appears up in the air. And if the answer is no, the next steps are uncertain – with Harmony having called the current terms “a final offer”. Related: Nuclear Industry Future Far From Clear

The situation is all the more complicated given that all four unions must agree in order for the current offer to proceed. Watch this space for important news from a place that produces 5% of the world’s bullion supply.

Here’s to striking a deal,

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Dave Forest

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