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South Africa diamond mining sector spared from wildcat strikes?

19 september 2012

South Africa has been witnessing a crippling industrial action for a month now by miners that are demanding higher wages.

The magic figure needed was R12500 (about $1500) — a threefold increase on the industry average.

The violent strike, which has so far claimed more than 45 lives, started at Lonmin’s platinum mine, in Marikana and had since spread to other mines.

These included Aquarius' Kroondal platinum mine, Xstrata's chrome mine near Rustenburg, Gold Fields and Anglo Platinum (Amplats).

Beating drums of the wildcat strike to a crescendo was the eccentric youthful politician Julius Malema, who was expelled from the ruling African National Congress party this year for ill discipline.

Seeing an opportunity to re-launch his fading political star, Malema had been gallivanting mines across the vast southern African country, addressing the dejected miners.

He said every mine should lay down tools for five days every month until there was an industry-wide deal on the R12,500 baseline wage.

Mining accounts for a fifth of South African GDP and was also a mainstay for Africa’s leading economy.

For now, Finance Minister Pravin Gordhan said there was no need to adjust the outlook for the country’s fiscal performance in his 2012 budget plan even if there had been revenue loss due to the unrest in the mining industry.

As many fear a repeat of a 2005 national mining strike, which badly affected the gold sector, there was a modicum of certainty that the country’s diamond mines will not catch the fire.

Interestingly, diamond mines had of late been experiencing migraine headaches over the weak diamond prices and depressed demand such that any attempts by their employees to import the riots would be disastrous.

The South African diamond sector had so far this year witnessed a single threat of an industrial action.

This was at Namakwa Diamonds last April.

Although the company said at the time that negotiations were ongoing and the strike action would not have any material impact on the production output for the year, there was no update on whether the strike went ahead, a sign that management had managed to avert the industrial action.

The only successful strike registered in the South African diamond sector was more than a year ago.

It was at De Beers.

Interestingly, its workers threw their tools down over wage demands at a time South Africa witnessed industrial actions in other important mining sectors.

The diamond workers asked for a 15 percent increase from De Beers, while the diamond giant said it could manage a 7 percent increase.

However, an agreement was later reached after 14 days of striking.

Artisans and more skilled employees were given an 8 percent wage increase, while entry level employees got a 10 percent increment.

A 2 percent increase to the stand-by allowance was also agreed to.

The agreement was for a two year period and the question that many were asking is whether De Beers’ employees would reneged on this deal or not.

De Beers was optimistic that the situation at its mines would remain calm, while miners from Lonmin continue pelting stones at the police and brandish spears, knobkerries and sticks.

“De Beers values the good relationships it has with organised labour in South Africa. We are committed to the welfare and wellbeing of the men and women who work for De Beers,” said group head of media relations Lynette Gould in an interview with Rough & Polished recently. 

By and large, it was immaterial whether the diamond sector was going to be hit by the wildcat strikes or not.

At the end of the day, what matters most was the potential harm that a strike of this magnitude may have on South Africa’s image and economy in the long run if not dealt with decisively.

Rubble rousers, as the South African government described Malema and his adepts, should be kept at bay, as their satanic ideas had a potential to cause a massive civil unrest.

True, mining firms, are to be partly blamed for enjoying sky high profits, while their employees, who toil dangerously under the ground, teem in abject poverty.

However, the miners’ demands were just frivolous, as a heavy wage bill will at the end of the day leave the mines out of business.

A reasonable deal is needed pronto to stop this madness, if not, South Africa will slide into a mini war zone in no time.

Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished