NO WORK: Striking miners evicted from company housing at Gold Fields' KDC West mine occupy a hill near the mine in Carletonville, west of Johannesburg, earlier this week. Picture: REUTERS
NO WORK: Striking miners evicted from company housing at Gold Fields' KDC West mine occupy a hill near the mine in Carletonville, west of Johannesburg, in October. Picture: REUTERS

SOUTH Africa needs a "new normal" to deal with a militant labour environment that is costing the country billions in revenue and destroying jobs, according to industry players.

One of South Africa's biggest gold producers, Harmony Gold, took a step in this direction this week when it made individual workers at its Kusasulethu mine sign a treaty with the company in order to return to work. This has never been done before.

The mine had been closed since December 20 due to illegal and militant labour action, putting about 6000 jobs at risk. Harmony Gold responded by putting its own demands on the table - for workers to return to order and comply with law and safety requirements before it would reopen the mine.

"This is quite a revolutionary move," said Cadiz mining analyst Peter Major.

The agreement essentially locks individual workers into a contract with the employer.

"This means that individual workers can now be taken to task when stepping over the line," said Major.

If similar agreements had been put in place a year ago when trouble first started brewing on the mines at Impala Platinum, a "Marikana" could possibly have been prevented, Mr Major said.

Marikana was a boiling point in South Africa labour relations and saw 46 people killed during violent protests at platinum-miner Lonmin's Marikana mine. Operations at Lonmin have since been resumed.

Operations at Impala Platinum, however, are yet to be normalised after the deadly six-week strike that ended in March last year. Production for the six months to end December at Rustenburg was 25% lower at 368,000 ounces as it continued "to be affected by the complex changing labour environment experienced since the strike and subsequent events in the region", the company said this week.

Operations have also been affected by company- and government-imposed stoppages, mining quality and a lack of ore reserve flexibility, Impala said.

Membership of the National Union of Mineworkers (NUM) at Impala's mines has fallen to below 10%, with the Association of Mineworkers and Construction Union (Amcu) now representing more than 70% of employees. While the NUM was told as early as March that it was no longer the majority union and that its majority agreement, giving it significant rights, had lapsed, negotiations over a new agreement are still continuing. The NUM has been to court three times in an unsuccessful attempt to overturn the process.

Meanwhile, the world's largest platinum miner Amplats has suspended its restructuring plans, announced at the end of January, for 60 days after it came under fire from the government over an intention to retrench up to 14000 workers at four affected shafts.

The company reported an operating loss of R6.3bin and newly appointed CEO Chris Griffith said Amplats did not have any other options for its restructuring than the ones that were already on the table.

Gold Fields lost out on 145,000 ounces of gold production due to the illegal strikes at its Beatrix and KDC mines during the latter part of last year. Gold Fields will officially transfer these assets to a new company, Sibanye Gold, on Monday. The two companies listed separately this week.

Newly appointed head of Sibanye Gold Neal Froneman, a veteran of South African mining, has indicated that the company will take a hard line on illegal labour action. Froneman previously warned that the company would not hesitate to stall operations if they are hindered by unruly labour activity.

Gold Fields CEO Nick Holland said the extended strikes across the industry have had a significant impact beyond production.

"South Africa's economy was the biggest loser in the strike, suffering not only from the loss of tax revenue but more significantly from a loss of investor confidence at a time when investment is critical in achieving our national development objectives, the most important of which is the need to create and protect jobs," said Holland.

A London-based analyst agreed with Holland: "Labour unrest in 2012 cost the mining industry and the country billions of dollars in lost revenue and did irreparable damage to the country's image as a sound investment destination."

* This article was first published in Sunday Times: Business Times