Investors fond of placing their bets on the safe haven yellow metal gold may well expect prices of the commodity to surge in the coming months as South Africa, the sixth-largest gold producer in the world, braces for an industrywide workers' strike that is sure to affect global production.
Global Prices of Gold Possible to Jump
On Thursday, wage hike talks between South African mining firms and workers broke down, paving the way for an expected labour force shutdown.
- 6.5 per cent increase for category four and five employees, including rock drill operators;
- Six per cent on the basic wage of category six to eight employees, as well as miners, artisans, and officials;
- Accommodation allowances would likewise be increased parallel to increases in the consumer price index
"Our final offer is just that, a final offer, and it remains on the table," Graham Briggs, Harmony Gold Chief Executive, told a news conference.
"It is an offer that has been well-considered and debated at length and is, in my view, a good offer."
But all were rejected by the National Union of Mineworkers (NUM), considered the country's main union in the gold sector, which represent some 142,000 workers.
With the breakdown, the industry expects to lose 349 million rand (AU$38 million) of revenue daily.
"Producers lose production, revenue, profit and the confidence of the markets; some may even have to shut down shafts, possibly forever," Mr Briggs said.
Noting this would become the third wage hike in a span of 18 months, Mr Briggs noted the South African gold industry cannot afford to stage multiyear wage hikes as this would most definitely "destroy jobs."
It was only in July when the South African gold sector had its last wage hike of between 7.5 per cent and 10 per cent.
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