Johannesburg - Sibanye Gold, South Africa’s biggest gold producer, in an unusual move introduced a R25 monthly wage “stability premium” across the board as part of a plan to avert a strike as it tries to cash in on a bullish bullion market.
The gold price hit a three-week high yesterday to trade at $1 254.76 (R18 758.20) an ounce, boosted by the weak rand.
Read: Union agrees to wage deal with Sibanye Gold
Sibanye shares strengthened 5.14 percent yesterday to trade at R56.64 a share on the JSE before closing at R58.12.
Sibanye was the only mining company that snapped up assets despite the weak commodity price environment and planned to keep up the momentum as its share price grew by 147 percent in the year to date.
The firm said yesterday that it was in talks with organised labour to introduce a “stability premium” after averting a strike by the Association of Mineworkers and Construction Union (Amcu) last week.
Amcu called off a wage strike after Sibanye offered the premium, despite the three-year wage agreement for a 12 percent increase, or R675 a month, that it reached with the National Union of Mineworkers (NUM), Solidarity and Uasa in October.
Sibanye spokesman James Wellsted said the company had not reopened negotiations, but was concerned about the impact of a strike on its 40 000-strong workforce, the economy and the risk of a credit downgrade for the country. “We have said we want to offer a R25 monthly stability premium in the interest of peace… It was part of discussions with Amcu last week,” Wellsted said.
Jimmy Gama, the national treasurer at Amcu, said it had in fact agreed to a R25 monthly increase, not a premium. “I am not sure what a premium is, we agreed to an increase on top of the R675 a month. The increase means Amcu succeeded in improving the R675 a month settlement,” he said.
The move has infuriated the NUM, which said it planned to write a letter to the Chamber of Mines to demand that the company reopen the wage negotiations.
Agreement
“If Sibanye Gold wants to amend the agreement signed by the NUM and other two unions, they must go back to the Chamber of Mines for further wage negotiations and amendments to the agreement,” the NUM said.
Peter Major, an analyst at Cadiz Corporate Solutions, said he had not heard of a “stability premium” before – so he was hoping this was not an official term used by the union or management leaders.
“You certainly don’t want to create an impression with ‘anyone’ that you are you ‘paying’ people ‘not’ to burn your mine.
“In reality it may very well ‘be’ a stability premium. But please don’t use that term as it just sounds way too extortionist. Let Sibanye and the unions call it the abnormal gold price increase bonus – payable because the gold price has shot up by 30 percent in rand terms in literally a month,” Major said.
Rene Hochreiter, an analyst at NOAH Capital Markets, said the “stability premium” was unlikely to break Sibanye’s bank because the rallying gold price meant the gold industry was in a better space.
“The gold price is much higher, and is in a better place than it was when Sibanye reached the three-year wage deal with the three other unions. I think R25 is… a very elegant way of getting out of the situation,” he said.
“The worry was that if Sibanye gave Amcu members an increase and not NUM members there would be hell to pay. Sibanye has given everyone a R25 increase, and Amcu is taking the credit. It is all political.
“The Sibanye share price has strengthened today because… Sibanye has given R25 across the board, and that Amcu is not going on strike… Sibanye would never have given Amcu members more than the NUM,” he said.
BUSINESS REPORT