investors fret as s africa strikes spread
Last Updated : GMT 06:41:18
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Investors fret as S Africa strikes spread

Arab Today, arab today

Arab Today, arab today Investors fret as S Africa strikes spread

Cape Town - AFP

Investors warned that rolling strikes in South Africa could hit investment in the continent\'s largest economy Wednesday, as industrial action continued to spread across sectors. With coal miners, truck drivers and yet more gold miners becoming the latest groups to down tools, concern is growing about the long-term impact on South Africa\'s economy despite optimism over the continent\'s current economic path. Investors warned that a failure to solve the impasse would have a severe impact on the mining sector in particular, which accounts for a fifth of South Africa\'s GDP. \"I don\'t think it has done damage yet, but I think if it is not knocked on the head in the short term, it can have considerable negative effects on the long-term innovation climate in South Africa,\" said Cobus Venter, director of investment consulting firm Econex. The illegal action combined with \"uncertainties about the future of labour law in South Africa, compounded with the impact of uncertainty on mineral rights in South Africa is quite a toxic combination,\" he told AFP. With 24,000 miners on strike at Gold Fields mines, around 20,000 at Anglo American Platinum and at least 17,500 at AngloGold Ashanti, firms have seen production slashed, while being left with weakened union interlocutors. \"The trouble is we don\'t know when it\'s going to end. This year it\'s 16,000 (strikers), next year it\'s 20,000, then 30,000,\" said an analyst from a mining firm who requested anonymity because of the sensitive nature of the topic. \"There doesn\'t seem to be any sort of control,\" he added. \"It looks like these guys are not listening to the unions anymore.\" Standard Chartered Bank\'s Razia Khan echoed those concerns. \"There is little visibility on how far the industrial action will extend, and it is particularly discomfiting at a time when downside risks to growth predominate,\" she told AFP. The Johannesburg Stock Exchange\'s Top 40 index closed 1.9 percentage points lower on Wednesday, the largest single day drop since April this year. Khan said that despite this drop there was a worrying disconnect between financial markets and real economic developments. \"On the one hand, we\'ve got the extremely worrying news of industrial action spreading to the rest of the mining sector... and on the other, a currency that has been driven much more by South Africa\'s index inclusion than on-the-ground factors.\" Strikes for higher wages spread from platinum to gold, chrome and coal industries after workers downed tools at the Lonmin platinum mine on August 10. Lonmin management agreed to up to 22-percent wage hikes, ending a strike that left a total of 46 people dead -- including 34 shot dead by police in one day -- at the mine after weeks of violence. Now workers at other mines are demanding similar increases. Anglo American Platinum on Wednesday confirmed it had lost around 20,000 ounces of production, with a market value of over $35 million, since wildcat strikes started at its Rustenburg operations northwest of Johannesburg. Strikes at world number four producer Gold Fields meanwhile turned violent overnight, said spokesman Willie Jacobsz. \"In the past 24 hours there has been an escalation of intimidation, threats against non-strikers,\" he told AFP. Following the Lonmin deal Moody\'s warned that prolonged strikes \"could lead to reduced production and lower cash generation, which ... would exert pressure on the operating margins.\" The cost of extraction in South Africa is already among the world\'s highest, thanks to a mix of labour, currency and geological problems. Strikers at a Coal of Africa mine already rejected an unprecedented 22-percent wage increase offer on Tuesday.

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