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Coal strike could threaten SA power supplies

Coal strike could affect
Eskom’s power supply
Johannesburg, South Africa — ESI-AFRICA.COM — 25 July 2011 – The first of anything up to 150,000 South African coal workers seeking a 14% wage increase have started a strike that could have an adverse effect on South African power supplies, as well as dent the country’s exports.

Reuters reports that hundreds of thousands of union workers have downed tools in recent weeks, or are threatening to do so, seeking raises of double or triple the 5% inflation rate in the mid-year bargaining sessions known locally as ‘strike season’.

“The strike will hit hard the stockpiles at national power utility Eskom Holdings, which are at their lowest ever,” National Union of Mineworkers (NUM) spokesman Lesiba Seshoka told Reuters. Eskom relies on coal for more than 90% of its electricity production and usually has about five to six weeks’ supply available.

Eskom, battling a power crunch that threatens the energy-intensive mining sector, is itself facing strike threats from NUM workers at the state utility seeking 16% wage increases. Meanwhile the utility plans steep increases in electricity prices to pay for much-needed new power stations, adding to inflationary pressure and taking more money out of middle class paychecks.

Seshoka said coal employers had offered between 7 and 8.5%. No talks were in prospect over what would be one of the largest work stoppages in this strike season. The Chamber of Mines is negotiating on behalf of several coal miners, including Anglo Thermal Coal SA, Exxaro, Optimum Coal and Xstrata Coal.

Employers over the past two years have struck wage deals averaging about 8%, a survey said, 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.

In a separate strike about to move into its third week, the union that represents about 70,000 fuel, paper and chemical workers said talks with employers were deadlocked. The CEPPWAWU union has lowered its pay demand to a 9.5% increase from 13%, and employers have offered 8%.

South African workers at global diamond mining giant De Beers have also gone on strike seeking 15% wage increases. De Beers is offering 7.5% and a one-off payment of R2,500.