Mining unrest in South Africa escalates further, with AngloGold Ashanti announcing a stoppage to all of its South African productions as miners at two more of its plants begin strikes.

The company – which is the third largest gold producer in the world – disclosed that workers at its West Wits and Vaal River operations have downed tools, embarking on an unprotected strike demanding pay increases echoed across the mining sector.  These strikers join AngloGold labourers from the Kopanang mine who have been striking since September 20th, to no resolution yet.

AngloGold employs approximately 35,000 workers across its South African operations, most of who are now striking, the company confirms.  South Africa accounts for a third of the company’s global output, thus this halt to all AngloGold production in the country is a significant hit to the company.

With these additional stoppages, it is estimated that over 39 percent of South African gold output has now been halted, as multiple mining companies experience strikes among the workforce.  It is thought that over 75,000 labourers are currently on strike in South Africa – approximately 15 percent of the mining sector’s work force.

Rival gold-producer GoldFields has been forced to stop production at two of its plants, as workers strike in demands for pay increases.

Separately, Anglo American Platinum (Amplats) has also experienced on-going unrest with strikes already having caused the company 20 million ounces of lost platinum production – the company yesterday announcing that it would start terminating employment for those who do not return to work today.

Even the coal production industry has been affected, with Coal of Africa shutting down operations on Monday as labourers began a legal strike, mediation having failed.

The turmoil across the sector all stems from the controversial resolution of the infamous strikes at the Lonmin operation at Marikana.  Following six weeks of violent striking amidst which 45 people were killed, the employer awarded striking workers between 11 and 22 per cent pay package increases in an unprecedented hike to wages.  However, this hike appears to have set a new standard for pay levels across the sector, with producers one by one witnessing the labour force down tools in demands for employers to match the Lonmin wage increase.

The unrest in the sector is having a substantial economic impact, with President Zuma making a plea to workers earlier this month to use official and peaceful methods to negotiate salary rises rather than halting the country’s production.  These stoppages, he said, had by mid-September already caused the country a detriment of 3.1 billion South African rand ($378 million).

Investors also have reason to be worried, as share prices in mining companies continue to fall.  AngloGold closed on the Johannesburg Stock Exchange yesterday at 283.29 rand ($34.6), a 5.1 per cent drop; while GoldFields saw a 2.3 per cent decrease in share price yesterday closing at 102.98 rand ($12.5).  Indeed, even the price of gold has taken a hit, with prices in London declining 0.9 per cent yesterday to $ 1,744.65 per ounce.


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