SISHEN Iron Ore, a unit of Kumba Iron Ore, has declared force majeure on its deliveries in South Africa following illegal strike action, ArcelorMittal South Africa said on Monday.
Kumba Iron Ore is losing 120,000 tons of output per day.
Labour unrest has spread from the mines into the public sector, with the South African Municipal Workers’ Union (Samwu) saying on Monday it would launch a strike over pay in the next few days.
Since August, close to 100,000 workers, including 75,000 in the mining sector, have downed tools in often illegal and violent protests that look likely to hit growth this year and undermine the government’s efforts to cut its budget deficit.
Finance Minister Pravin Gordhan has promised to reduce the deficit from the 4.6% gross domestic product (GDP) forecast for this financial year. Any public sector wage increase would make that more difficult.
"The union is mobilising towards a national protest, which would begin as soon as this week," Samwu spokesman Tahir Sema said.
A majority of Samwu’s 190,000 members are expected to join the strike for "market-related salaries" which may last for one day or drag on indefinitely, Sema said.
The strikes, which started in the platinum industry and spread to other mining companies and beyond, have raised questions about President Jacob Zuma’s leadership and tarnished South Africa’s reputation among foreign investors.
The rand fell to a three-and-a-half year low against the dollar on Monday, while the cost of insuring South African debt against default increased, reflecting worsening investor sentiment toward local assets.
"International investors are really quite concerned around South Africa," said Mohammed Nalla, an analyst at Nedbank Capital in Johannesburg. "Structurally and fundamentally, the outlook on the rand is deteriorating."
Moody’s cut South Africa’s government bond rating last month, citing the government’s difficulty in keeping up with economic challenges and widening strikes.
Eland on strike
Wildcat strikes have already shut down large parts of the mining industry in the world’s top platinum producer and a major supplier of gold, pushing prices of precious metals higher.
Xstrata is the latest victim, with workers at its Eland platinum mine walking out on Friday.
The mine is expected to produce 176,000 ounces of platinum this year, compared with forecast production nationwide of 4.9 million ounces of the precious metal used in jewellery and vehicle catalytic converters.
Anglo American Platinum (Amplats) fired 12,000 wildcat strikers on Friday, a high-stakes attempt by the world’s top producer to squash illegal stoppages that have hit output at seven of its mines.
The dismissed workers were defiant and threatened a repeat of the showdown with security forces at rival Lonmin’s Marikana mine that led to the police killing 34 miners on August 16.
"Those who are dismissed will make sure that there will be no operations operating and that will cause a massacre, just like at Marikana," said one worker representative, who asked not to be named.
AngloGold Ashanti, the world’s third-largest bullion producer, warned that a prolonged strike could lead to the closure of marginal shafts and job losses, but said it was not considering mass sackings.
Transport strike
A strike by more than 20,000 truck drivers entered its third week on Monday, hitting logistics companies and leading to filling stations running out of some grades of fuel. Wage talks with employers were expected to resume on Tuesday.
Workers at Transnet will embark on a one-day strike led by the South African Transport and Allied Workers’ Union (Satawu), the company said on Monday.
Transnet general manager Mboniso Sigonyela said the company had received notice that the strike would take place on October 15.
"We are considering the notice and will activate contingency measures to ensure minimal disruption should the action materialise," he said in a statement.
The one-day labour action was in support of the continuing truck drivers’ strike.
Satawu spokesman Vincent Masoga said the union gave a seven-day notice to strike at the Commission for Conciliation, Mediation and Arbitration last Friday.
At the weekend, the Road Freight Employers Association (RFEA) failed to agree on a deal with unions. This means the country’s petrol suppliers will have to rely on a reserve fleet for another week, and consumers will be frustrated by more filling stations that have run dry.
The union would continue to negotiate with employers, with the next meeting to discuss truck drivers’ salary demands scheduled for Tuesday, he said.
Satawu had been asking for a 12% wage increase, but was prepared to negotiate a compromise if the employers, including the RFEA, were also willing to compromise.
"We’re prepared to even take 10%, but the guys are not budging at all," Mr Masoga said.
The unions involved in the truck drivers’ strike, involving more than 20,000 people, said action continued on Saturday, but they were hopeful an agreement would be reached during negotiations this week.
Reuters and Sapa
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