By: Chanel Pringle

26th March 2009

Updated 2 hours 4 minutes ago

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JOHANNESBURG (miningweekly.com) – Tough wage negotiations lie ahead for South Africa’s gold sector this year, with the country’s biggest mineworkers union, the National Union of Mineworkers (NUM), saying that its members would not be the "sacrificial lamb".

NUM spokesperson Lesiba Seshoka told Mining Weekly Online on Thursday that it would not ask for less than inflation or inflation plus 1%, as the gold sector was expected to continue seeing higher gold prices.

He added that gold was also seen as a safe-haven commodity, which was boosting the industry.

Seshoka said that the union would fight until its demands were met, as its members were in "dire straits".

The NUM was expected to hand over its mandate to the Chamber of Mines (CoM) by the end of this month or early April, after which, negotiations would most likely start by the end of April or early May.

CoM chief negotiator Dr Elize Strydom said that she expected the negotiations to be "fairly tough" this year, as the unions would most likely base their demands on the higher gold price, which was above $900/oz, and the weakening of the rand, which boosted South Africa’s exports.

However, production levels were continuously reducing, she said, adding that it was the Chamber’s responsibility to find a balance between these factors.

South Africa, which formerly held top position, was now only the world’s third-biggest gold producer, following China and the US.

Strydom noted that the unions and the sector would hopefully conclude the negotiations by the end of July or early August, despite the former two-year wage negotiation agreement expiring in June.

Meanwhile, Standard Bank precious-metals analyst Manqoba Madinane told Mining Weekly Online that the gold industry, as a whole, looked "healthy", with the price of gold set to reach above $1 000/oz going forward.

This could mean that the gold industry would likely meet the demands of the unions, he noted.

Edited by: Mariaan Webb

Personal comment .: In the eventuality of a strike in South Africa it should put pressure up on the price of gold , while hindering the value of gold mines shares in that region , and improving share value elsewhere in a small measure.