20110726
Reuters
JOHANNESBURG (Reuters) - South African coal workers went on strike on Monday seeking inflation-busting 14 percent wage increases, but power utility Eskom said the stoppage would not have an immediate impact on plants providing electricity to Africa's largest economy.

Hundreds of thousands of workers across the country have downed tools in recent weeks, or are threatening to do so, seeking raises double or triple the 5 percent inflation rate in the mid-year bargaining session known as "strike season".

State-run Eskom , which relies on coal for most of its power generation, said the latest strike would only have an impact if it became protracted.

"We've got on average 38 days of coal stockpiles at the power stations," spokesman Tony Stott said.

Lesiba Seshoka, spokesman for the powerful National Union of Mineworkers (NUM), said about 150,000 were on strike and employers have offered pay rises of 7 to 8.5 percent.

The chamber of mines said there are about 30,000 unionised workers in the coal sector and it was unclear how many were striking.

Employers over the past two years have struck wage deals averaging about 8 percent with many firms seeing the above-inflation settlements as a necessary cost of doing business in South Africa. They have also slashed jobs over the period to make up for the higher personnel costs.

Independent coal analyst Xavier Prevost said: "If there is no compromise and they continue like this, it's going to be serious and the damage to the economy will be big."

"If we don't produce coal, the first to be affected will be exports. Our (export) stockpiles will probably not last longer than 15 days".

The industry and unions are planning to resume talks on Tuesday in a bid to solve the dispute, Seshoka said.

The Richards Bay Coal Terminal, which ships most of South Africa's coal abroad, said stocks stood at a healthy 2.99 million tonnes at the end of June.

Eskom has been under pressure to build new plants to avoid a repeat of the power shortage that brought the economy to its knees in 2008, forcing mines to shut down for days and costing the country billions of dollars in lost output.

It plans steep increases in electricity prices to pay for much-needed new power stations, adding to inflationary pressures and taking more money out of middle-class paychecks.

But Eskom is facing political pressure to settle with workers. The ruling African National Congress is allied with organised labour and wants to placate its millions of voters.

The Chamber of Mines is negotiating on behalf of several coal mining groups, including Anglo Thermal Coal SA, Exxaro, Optimum Coal and Xstrata Coal.

GOLD DIGGERS

Economists have said wage settlements well above inflation hurt the country's competitiveness and long-term outlook by driving up the costs for a labour force already more expensive than those in other emerging markets and far less efficient.

In a separate strike stretching into its third week, the union that represents about 70,000 fuel, paper and chemical workers said it planned talks with employers on Tuesday, which could bring an end to the dispute.

The CEPPWAWU union has lowered its pay demand to a 9.5 percent increase from 13 percent. Employers have offered 8 percent.

In another dispute, the NUM is also seeking a 14 percent wage raise from gold mining companies. The chamber of mines says AngloGold and Gold Fields have offered 5 to 5.5 percent while Harmony and junior minor Rand Uranium has offered 4.8 to 5.3 percent.

There have also been worries work stoppages could hit the country's platinum sector. South Africa is the world's biggest producer of the precious metal used in jewelry and catalytic converters for cars.