The killings at Lonmin's (LMI) Marikana mine outside Johannesburg marked the deadliest outbreak of labour unrest in recent South African history, but they also precipitated a spate of wildcat strikes in the mining industry which have galvanised workers in other segments of the economy.
South Africa's economy is now imperilled by an escalation of industrial unrest and the knock-on effects linked to a potential fall in corporate tax receipts. The situation prompted Standard & Poor's to cut South Africa's credit rating, which duly drove up state bond yields and hit the value of the rand.
It's estimated that around 15 per cent of South Africa's miners are now out on strike - many without union consent - and the nation's fuel supplies are periodically coming under threat due to sympathetic action by the national haulage industry. Initially, at least, it appeared that the big mining companies were prepared to play hard ball. Mining giants Amplats and AngloGold Ashanti have either sacked or suspended thousands of mine workers in the wake of illegal stoppages, but the National Union of Mineworkers (NUM) confirmed that South Africa's mining industry body has agreed to reopen wage talks in the coal and gold mining sectors, suggesting that the industry may be prepared to make more concessions.
These problems obviously have negative implications for UK-listed miners with interests in South Africa. Xstrata (XTA)'s Eland platinum mine was hit by wildcat strike action earlier this month, but it's no longer just precious metals miners bearing the brunt. Trouble has erupted at the giant Sishen mine operated by Kumba Iron Ore, a subsidiary of Anglo American. But the real fear is that the unrest could spread to South Africa's coal mining industry, thereby restricting supplies to state power utility Eskom, which is already struggling with its creaking infrastructure to meet the needs of the nation's economy. Four years ago, the nation's power grid all but collapsed and mine production was hit badly by a series of rolling blackouts.
There's no guarantee that mine workers would automatically return to work, or forestall any future illegal strike action, even if the NUM's demands for improved pay and conditions were met. It's difficult to envisage how any negotiated settlement would prove meaningful given growing disaffection for the ruling African National Congress (ANC) and the country's union movement.
