Coal mine officials in South Africa, the world’s largest coal supplier, are cautiously watching events in other sectors of the mining industry in the hopes wildcat strikes won’t spread.
Analysts say the coal sector is less likely to strike compared to gold or platinum because coal mines are located at the surface, and the work is less dangerous. They are also better paid and have better living conditions.
The coal industry employs 70,000.
Strikes Sweeping The Diamond, Iron Ore, Gold and Platinum Sectors
Nearly 75,000 miners in the diamond, iron ore, gold and platinum sectors have been striking for two months, adding strain on an already sluggish economy. South Africa, Africa’s largest economy, receives 6% of its gross domestic product from mining.
Mid August, a strike at a platinum mine owned by Lonmin ended with violence-related deaths. Workers were awarded a 22% pay increase as a result of the strike, setting a precedent that worries other mining companies.
Meanwhile, the world’s largest platinum producer Anglo American Platinum has had seven mines affected by strikes. Those seven mines account for 25% of the world’s precious metal supply.
In the gold sector, Gold Fields and AngloGold Ashanti plan to reopen talks with entry-level workers. Meanwhile, Kumba Iron Ore closed one of its mines after strikers blocked the pit.
Analysts say the strikes are a sign of larger problems, namely the lack of labor reform and uncertainty in the industry. There have two labor disputes in the coal sector so far this month.
In 2011, workers went on strike for a salary increase, and the dispute ended quickly.
Deliveries Affected As Truckers Strike
More than 20,000 truckers in South Africa are also on strike, affecting deliveries of explosives, diesel and other supplies. According to the Road Freight Employers' Association, the trucker's unions recently rejected an offer that could have raised their salaries by 18% over two years.
Large coal companies ship their coal via rail, but smaller mines maybe soon be affected.
State-owned utility Eskom receives 30% of its coal supply by truck. If the strike continues, it will be under pressure to prevent blackouts.
Key Statistics - Coal Mining Industry In South Africa (source: MarketLine)
- In 2010, the coal mine production industry in South Africa had revenue totaling $6 billion. For the period spanning 2006-2010, this represents a compound annual growth rate (CAGR) of 10%.
- Between 2006 and 2010, industry consumption volume for coal mining in South Africa grew at a CAGR of less than 1%. In 2010, it reached 278 million tons.
- For the five-year period 2010-2015, the coal mining industry in South Africa is predicted to decelerate, with a CAGR of 6.4% anticipated. By the end of 2015, the industry is forecast to be worth $8.3 billion.