To date, striking workers at Sibanye-Stillwater’s gold operations have lost nearly R1 billion in wages since the start of the strike in the first week of March, while investors have arguably lost nearly R60 billion. The damage to investor sentiment towards labour-intensive SA companies – in a country with unemployment running at nearly 50% – is incalculable.
Sibanye is running a tally on its website of how much striking employees are losing in wages every day they are on strike, as well as how much each employee has lost to date (on day 43 of the strike).
According to the company, each Category 4 employee is losing R552 per day in wages and has to date lost R23 736 on average. Category 8 employees are losing R684 per day and by April 20 had lost R29 412 each.
“These losses will never be recovered,” says Sibanye.
“It is regrettable that unions have decided to resort to strike action which will severely impact all stakeholders. Employees, their families and communities stand to lose much.”
No work, no pay
Last week, Sibanye executive vice president of SA gold operations Richard Cox noted that employees had lost a total of R790 million in wages after being on strike for 36 days as the principle of ‘no work, no pay’ applies.
A quick calculation shows that the total loss in salaries after 43 days of striking exceeds R950 million.
Government has lost more than R100 million in taxes related to salaries. “And significantly more in lost taxes and mining royalties,” says Cox.
Sibanye noted that it respects the rights of employees and the unions to strike, but has urged the unions more than once to reconsider their actions in the interests of striking employees who “clearly do not support” the strike.
“This is evidenced by the very low employee participation in protests at picketing sites and the constant resignation of members from Amcu [Association of Mineworkers and Construction Union] and the NUM [National Union of Mineworkers],” according to company management.
Neither NUM nor Amcu replied to questions with regards to this statement.
Cox pointed out that striking Category 4 to Category 8 employees have already lost more than the cumulative value of the final increase offered by Sibanye-Stillwater over the first two years of the wage period, based on the difference of R300 per month between what Sibanye is offering and the unions’ demand of an increase of R1 000 per month.
“Should the strike continue until the end of April, striking employees would have lost all value they could have gained from a wage increase,” says Cox.
Sibanye’s offer was accepted by two other unions, Uasa and Solidarity, in February 2022.
Sibanye maintains that its offer is fair and considers inflationary living costs. “Our offer of a R700 per month increase in basic annual wages each year for a period of three years amounts to a 6.8% increase in year one, 6.4% in year two and 6% in year three for Category 4 employees and will add R1.5 billion to the wage bill at the SA gold operations.
“Amcu and the NUM’s R1 000 demand amounts to a 9.8% increase in year one, 8.8% in year two and 8.2% in year three for Category 4 employees, which is well above inflation and [would] add R2.5 billion to our wage bill,” according to Cox.
“The additional R1 billion in the wage base from union demands is equivalent to an approximate R40 000/kg increase in costs, which would essentially erode the R46,443/kg all-in sustaining cost margin achieved in 2021, threatening the sustainability of operations and potentially negatively impacting all stakeholders, including employees.
“We will not be coerced into acceding to demands which are not inflation related, unaffordable and threaten the sustainability of our operations.
“In this regard, any intensification of the strike by the unions will have no impact on our position of safeguarding the interests of all stakeholders,” says Cox, referring to threats by the unions to extend the strike to the company’s platinum mines as well.
Personal attack on Froneman
Amcu and NUM issued a combined statement to explain their position:
“This strike, which entered its second month last week, has been characterised by peace and discipline amongst the almost 30 000 Amcu and NUM members. The workers are strong in their conviction, and they remain steadfast in their demand for a better life and livelihood while working in the belly of the earth.
“Sibanye-Stillwater has over the past years earned the title of worst employer amongst workers, holding the record of the most mineworkers killed in 2021 and the highest levels of inequality in the mining industry. Sibanye-Stillwater quite literally made a killing in 2020 and 2021, thanks to convincing the government that the mining of precious metals should be regarded as an essential service.
“Thanks to the commodity boom which coincided with the global pandemic, Sibanye could pay their CEO a salary of R13 336 000 and a bonus of almost double that at R13 304 000. They paid R5.6 billion in dividends to shareholders,” say the unions in their statement signed off by NUM general secretary William Mabapa and Jeff Mphahlele, his counterpart at Amcu.
“At the core of the dispute which led to the strike is a mere R300 per worker per month. While Sibanye-Stillwater is offering R700, Amcu and the NUM demand R1 000 per month. This is the same increase which was agreed upon with Sibanye-Stillwater’s main rival in gold, Harmony Gold.
“As Amcu and NUM, we will not spare any cent to relieve the workers from the shackles of Froneman [referring to Sibanye CEO Neal Froneman].
“We will not allow him to continue to exploit our people by using the minerals that belong to the people. He is not the government, and he is not the owner of the minerals.
“We find it strange and unsettling that our government is so quiet when this man is undermining the very core of the Freedom Charter, which proclaims that the minerals belong to the people. We will never rest until this is addressed,” say Mabapa and Mphahlele.
They promised to lobby President Cyril Ramaphosa to intervene and announced a planned march from the JSE to the Union Buildings to garner public support.
The unions will probably not get a lot of support from investors, who would rather see Sibanye raking in some cash while the gold price is maintaining its recent gains.
In total, investors lost billions.
Sibanye’s share price dropped to the current R60, from R75 before the strike started at the beginning of March.
On average, the share prices of other SA gold mines increased by around 10% over the same period, indicating that Sibanye’s share price could have advanced to above R80 per share, if not for the strike. That shareholders ‘lost’ more than R20 per share amounts to a total loss of more than R56 billion based on the 2.8 billion shares in issue.
Meanwhile, it is noticeable that SA gold mines are not that popular with investors overall.
In addition to the erstwhile big SA mining groups shutting down mines because of ever-increasing costs and an unfriendly investor environment, they have also shed their SA interests. Sibanye bought these unwanted assets, emerging as the biggest mining house in SA.
A look at gold funds available to investors also shows that most fund managers prefer mining groups with investments in non-SA mines or those with the minimum exposure to SA mines.
This strike is unlikely to reverse the trend.
This article originally appeared on Moneyweb and has been republished with permission.