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UPDATE 1-S.African strikes ease as gold mine pay deal reached

Sherilee Lakmidas and Olivia Kumwenda
Thursday, 25 Oct 2012 | 3:43 PM ET

* National Union of Mineworkers accepts gold industry offer

* Striking workers return to Harmony's Kusasalethu mine

* Tens of thousands still on unofficial strikes

* Wildcat strikes cost economy over $1.1 billion this year

JOHANNESBURG, Oct 25 (Reuters) - South Africa's gold mines agreed a wage deal with unions on Thursday as the bulk of the gold sector's striking miners returned to work under threat of dismissal.

The returns marked success of a sort for a new tough approach by mining firms, but at least 12,000 gold and 20,000 platinum miners were still pursuing a wave of illegal strikes that have cost Africa's largest economy over 10 billion rand ($1.14 billion) this year, according to the National Treasury.

About 100,000 workers in all have downed tools across South Africa since August in the often violent strikes that have triggered downgrades of South Africa's credit ratings, and awkward questions about government performance for President Jacob Zuma and the ruling African National Congress (ANC).

After three weeks of negotiations, the National Union of Mineworkers (NUM) and the gold industry, which employs around 157,000, announced agreement on wage increases of between 1.5 and 10.8 percent for different categories of mine workers.

The deal is seen as a wage sweetener and comes as several mining firms have played hard-ball by sacking workers for illegal strikes.

Harmony Gold, South Africa's third-largest producer, said most of its 5,400 employees who were threatened with dismissal at its Kusasalethu mine were now back at work.

Strikes were also now over at two of Gold Fields' three mines, where workers faced threats of being sacked.

``Stability in the gold mining industry has been achieved at many of the operations and there are hopes that this trend will continue,'' said Chamber of Mines executive Elize Strydom.

But AngloGold Ashanti, South Africa's biggest producer, said on Wednesday it had sacked around half of its 24,000-strong local workforce who had ignored an ultimatum to return to work or be fired.

AngloGold spokesman Alan Fine said the company was optimistic the dismissed workers would return to work after they appealed their dismissals.

Mining firms have usually taken back most fired workers because it is more costly to train a new workforce. Analysts say this round of strikes will lead to some permanent job losses with firms shutting down marginal shafts.

PRESSURE ON ZUMA

The strikes have highlighted persisting glaring income inequality in South Africa, which has increased since Nelson Mandela's ANC took over following the end of white-minority rule in 1994, promising ``a better life for all''.

Some in the business community worry that Zuma, who faces ANC leadership elections at the end of the year, might try to buy social stability with increased welfare spending.

But Finance Minister Pravin Gordhan, presenting an interim budget on Wednesday, said there was no more money to dish out, bringing relief to investors worried about spiralling debt.

Gordhan cut South Africa's GDP forecast for the year to 2.5 percent from 2.7 percent and said the government needed some time to determine the full impact of the mine strikes on growth.

Zuma has come in for particular criticism for not responding faster to the Aug. 16 police killing of 34 strikers at Lonmin's Marikana platinum mine, the bloodiest security incident since the end of white-minority rule in 1994.

Critics and opponents of the president have tried to use the mines unrest to attack his rule ahead of the December ANC leadership elections, but most analysts see him with sufficient support within the party to see off his opponents and rivals.

Despite the return to work movement at other mines, a six-week strike at Anglo American Platinum (Amplats), the world's top producer of the metal, is no closer to ending.

Some 20,500 workers at its Union and Amandelbult operations are still holding out for higher wages. Amplats has also sacked 12,000 wildcat strikers at its Rustenburg mines.

Amplats on Thursday cut its full-year production target and capital expenditure plans after revealing that the walkouts had sliced 138,000 ounces off output, $217 million at today's price.

In the year to August, mining output fell 3.3 percent, with production of platinum group metals 15.3 percent lower. Strong iron ore demand from China has, however, helped offset some of the decline in the platinum, gold and coal sectors, the Treasury said.