S.Afris Harmony Gold: No Job Cuts If Labour Lowers Wage Demands

The chief executive of South African bullion producer Harmony Gold Mining Co said on Tuesday he could entertain a moratorium on job cuts if labour accepted wage increases in line with inflation.

South Africa’s mining ministry has held talks with companies and unions over planned job cuts and task teams have been mandated with finding ways to stem the growing tide of lay-offs in a country with an unemployment rate of over 25 percent. “I guess we could put a moratorium on retrenchments if unions put a condition that they are only going to get cost of living increases,” Harmony chief executive Graham Briggs said at a presentation of the company’s annual results.

Asked about the remarks at a subsequent media briefing, Briggs said: “I could give some serious attention to that if labour gave some serious attention to what I said.”

South Africa’s largest mining union, the National Union of Mineworkers, said earlier this month that 11,000 of its members could lose their jobs under planned cost cutting by mining companies.

Briggs’ remarks also come as Harmony and other producers are locked in wage talks with labour. The two biggest unions are seeking pay hikes of 80 percent to over double for the lowest-paid miners, against an inflation rate of 4.7 percent.

Briggs said if there was a strike he did not think it would be long, but admitted that a protracted stoppage “would do a huge amount of damage to the industry and particularly Harmony.”

On a range of fronts, Harmony’s metrics are worse than its South African peers. Its return on equity (ROE) according to Thomson’ Reuters data is negative 8.47 percent, far below Gold Fields, AngloGold Ashanti and Sibanye Gold. Harmony’s headline loss per share for the year to end June was 189 cents versus earnings of 26 cents last year.

A Reuters poll had forecast a wider loss of 223 cents per share. It managed to post quarterly earnings, with headline earnings of 44 cents a share from a loss of 60 cents a share in the previous quarter, as production and sales climbed and as it benefited from a deferred tax credit.