Just when you thought the mining industry was finally looking attractive, the unions have gotten involved. There have been noises in the market for a while now about potential labour action at Sibanye-Stillwater, as negotiations have been underway since November 2021.

This has now been confirmed through a notice sent to the company by the Association of Mineworkers and Construction Union (AMCU) and the National Union of Mineworkers (NUM) of protected strike action from the evening of 9th March.

This will target the South African gold operations, just as the gold price is performing well in response to inflation and a flight to safety of global capital. The timing couldn’t be worse.

Sibanye’s final offer was for Category 4 – 8 employees to receive increases of 6% in year 1, 5.7% in year 2 and 5.4% in year 3. This works out to an increase in each year of R800 per month. The offer for Miners, Artisans and Officials is 5% in each of the next three years.

To understand why this is important for Sibanye, consider that the cost of labour comprises 49% of operating costs in the gold operations. You may be interested to learn that electricity contributes 20%, so pressure on the system from Eskom has a direct impact on everyone.

The company has not backed down here. There is a web page dedicated to the gold wage negotiations, in which Sibanye has run a campaign around a central message of “know the facts” – aimed at the unionised workers.

At this stage, the fact is that labour action has come to the fore and the risk of it spreading across the industry is significant in my view. Workers are under pressure from cost increases, with shocking jumps in soft commodities and energy prices due to the Ukraine invasion bringing far more troubles on the horizon.

If there isn’t a speedy resolution to that crisis, inflationary pressures on lower income groups will be immense. That isn’t good news for Sibanye or any of the other companies operating in South Africa (and elsewhere).

The gold operations in South Africa represent a relatively small part of Sibanye’s business. We will have to wait and see who blinks first.