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The End Of A Dark Decade For Energy Commodities

Commodities have suffered through a…

Dave Forest

Dave Forest

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

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Has South Africa Just Pushed The Restart Button For Mining?

One of the most striking stories in mining the last decade has been the decline of South Africa. With that nation going from world’s top gold producer in 2006 all the way down to 7th place globally in 2016.

Part of that decline is due to geology — with deposits here being deep and expensive. But there’s another big reason for South Africa’s mining issues: labor problems that have plagued the gold and platinum sectors the last several years.

But a landmark court ruling this week may change that. With South Africa’s highest court severely curtailing the ability of mineworkers unions to stage crippling strikes.

South Africa’s Constitutional Court delivered a verdict Tuesday in a case brought by the Associated Mineworkers and Construction Union (AMCU). Where the union was appealing a 2014 Labor Court ruling that forced it to accept collective bargaining as part of wage negotiations.

The original case here stems to 2013. When AMCU’s fellow unions National Union of Mineworkers, UASA and Solidarity all accepted a pay deal with major gold mining companies — one which AMCU leaders disagreed with.

AMCU refused to accept the pay agreement. And were promptly taken to court by mining firms — who argued that under an “inclusive process” of bargaining, AMCU should be forced to accept the pay deal when a majority of other unions had signed off.

The Labor Court agreed, ruling that AMCU should be bound by the deal. Prompting AMCU reps to appeal to the Constitutional Court — leading up to this week’s decision, where Constitutional Court judges upheld the original decision in favor of mining companies. Related: Oil & Gas M&A Just Broke All Records

The result is that AMCU (and other unions) will no longer be able to singlehandedly go on “protected” strikes — where workers cannot be fired during labor action. Going forward, any such activist strikes would risk workers losing their jobs.

That’s almost certain to reduce the incidence of strikes across South Africa. Which would be welcome news for mining companies, bringing much more certainty to operations here.

The case isn’t completely finished, with AMCU lawyers saying they are examining a potential appeal of the Constitutional Court decision. Watch for next moves from the union, and for a potential improvement in the operational climate in South Africa if this week’s ruling does stand.

Here’s to getting to work.

By Dave Forest

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