Investors sell off gold firms

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IOL pic jan22 rsa bank notes Reuters File photo: Siphiwe Sibeko

Johannesburg - Gold stocks fell on the JSE yesterday, shrugging off gains made on Monday on investor uncertainty over the impact of a looming wage strike called for tomorrow across the platinum sector and some gold mines as well as sentiment ahead of a US Federal Reserve policy meeting.

Harmony Gold’s share price slipped 3.36 percent to close at R29.87, AngloGold Ashanti slumped 4.77 percent to R144 and Sibanye Gold fell 1.86 percent to R14.23. Gold was fixed at $1 238 an ounce (R431 000 a kilogram) in London yesterday afternoon, $17.75 lower than the second fix on Monday.

“Investors are reluctant to take big positions in bullion a week ahead of a US Federal Reserve policy meeting on January 28 to 29, when it could announce another cut to its bond-buying stimulus,” Imara SP Reid analyst Sibonginkosi Nyanga said.

The stocks fell after the Association of Mineworkers and Construction Union (Amcu) said it would down tools for a R12 500 monthly wage in a strike that will halt production at platinum and gold mines.

The strike would hurt the economy and would lead to a sell-off of mining shares, Cadiz Corporate Solutions analyst Peter Major said on SAfm yesterday. Major added that if shares fell, it showed that investors had lost confidence in South Africa’s ability to control the strike action.

Anglo American Platinum (Amplats) chief executive Chris Griffith warned that the strike was a threat to jobs at the company, which is currently busy with restructuring.

“A strike will completely undermine the progress we have made in the last few months and increase the possibility of further job losses,” he said.

Today, the Labour Court would rule on whether the wage strike in the gold companies was protected, Chamber of Mines spokeswoman Charmane Russell said yesterday.

“The order of the court will be followed,” Amcu president Joseph Mathunjwa told Bloomberg. “It goes both ways. If the court rules in our favour then the gold companies should respect that as well.”

The chamber approached the court to prevent the strike arguing that it was illegal because a two-year wage deal was reached in September last year.

Meanwhile, Solidarity, which represents 2.4 percent of workers in the gold sector, warned against the strike. “A strike could cripple an already fragile industry,” the union’s general secretary, Gideon du Plessis, said yesterday.

Amcu gave a 48-hour strike notice to companies in the gold and platinum sectors. It could create shortages at Amplats, Lonmin and Impala Platinum, the world’s biggest platinum producers. Platinum prices are expected to trend upwards.

“The above-ground stocks inventories are currently a significant overhang to the platinum price but the platinum sector strikes are expected to accelerate the market into sustained deficits, which will possibly lead to platinum price increases,” Nyanga said.

Platinum fixed at $1 444 an ounce yesterday afternoon, $26 lower than a day earlier.

The strike comes amid concerns among Amcu members that Mathunjwa has become a dictator and they question whether he has a strategy to carry out a successful strike.

Nomura analyst Peter Attard Montalto said: “The stakes for Amcu are so high, however, we think it is likely to try to prolong the strike for as long as possible over several weeks. Depending how many supporters remain with it and the legal issues it encounters, an initial big bang for, say, the first week may start to dwindle in subsequent weeks.”

In a somewhat unprecedented move, Labour Minister Mildred Oliphant sounded an early warning about the violent behaviour of striking workers.

“Violence during strikes remains an issue of concern to government and to the general public. We cannot afford to see the scenes of hawkers being deprived of their livelihood as workers go about the right of protesting what they regard as unfair labour practices.”

She said it was unlikely that there would be specific legal amendments to address this issue but ways of addressing violence would be sought.

“We all have to exercise leadership and show leadership. This leadership should also manifest in ensuring that the negotiating season starts as early as possible. It seems a self-defeating move to wait until the very last moment before negotiations get under way and this does not leave enough room for proper talks.”

* Northam Platinum employees agreed to increases of up to 9.5 percent last Friday, ending a strike led by the National Union of Mineworkers. - Additional reporting by Wiseman Khuzwayo



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