Gold Fields Ghana Mines Hit By Strike; Output Halted

By Devon Maylie

JOHANNESBURG-South Africa-based Gold Fields Ltd. (GFI) Wednesday halted operations at its two mines in Ghana, which form the company's largest gold-producing unit, after a wildcat strike broke out over a pay dispute.

The unrest in Ghana comes months after the company's South African mines were rocked by labor troubles. A 23-day strike that ended in October shut many of Gold Fields' mines in South Africa. Late last year, strikes also forced mine closures at other major South African gold, platinum and iron ore producers.

Gold Fields said it didn't believe the unrest in Ghana was a spillover from the strikes in South Africa last year. Rather, it is indicative of a spread of labor unrest that has hit other sectors in Ghana since the start of the year and could signal increased unrest to come, risk analysts said.

Teachers in the West African nation went on strike last month over government's reluctance to raise salaries in line with inflation and to offset currency depreciation. Doctors walked out in February over a similar issue.

"As the state struggles to meet public expectations for rapid improvements in standards of living following the natural resource boom of recent years, union activism is likely to increase," said Robert Borthwick, an Africa-focused analyst at U.K.-based risk consultancy firm Maplecroft.

It's also another strain on Gold Fields' now largest-producing operation.

"It is worrying for us," a spokeswoman for Gold Fields said of the labor unrest in Ghana. "We are engaging with the union. There hasn't been a history of unrest in Ghana at the mines."

So far the strike at the two mines in Ghana, which account for about 43% of Gold Fields' total production after a split in the company in February, has been peaceful, the spokeswoman said.

Last November, Gold Fields said it would "unbundle" its South Africa-based KDC and Beatrix mines into a company called Sibanye Gold, which was listed as an independent company in February. Following the split, Gold Fields' Tarkwa and Damang mines in Ghana became the company's largest gold-producing operations. The mines produce about 889,000 ounces of gold a year, based on company figures given out at the end of last year.

The strike, which started mid-morning Wednesday, is a protest over profit-based bonus calculations, food deliveries and accusations of discrimination between expatriate and Ghanaian employees, Gold Fields said. The company said it's investigating the local Ghana Mine Workers Union's concerns.

The strike coincides with wage negotiations, as a three-year wage contract expired in January and talks for a new agreement began last month. The talks stalled due to a disagreement over the profit-based bonus scheme. They are due to resume on April 15.

Miners receive an end-of-year bonus calculated from the company profit. The Gold Fields' spokeswoman said profit for the Ghana operation was hit last year by a rise in tax rates, which reduced the bonus paid.

Workers could face dismissal or lose pay for participating in the strike Wednesday, Gold Fields said in a statement.

The mining union said the length of the strike will depend on how Gold Fields responds to its demands.

"It's not going to be business as usual," said Eric Gyima, the union's deputy general secretary. "Their two mines in Ghana are so strategic. They should be careful how they manage their mines."

"If a Marikana can happen in South Africa, it can happen here," said Mr. Gyima, referring to the strike that started at Lonmin Plc's Marikana mine in South Africa last year that left around 46 people dead in clashes between workers and police.

The union official declined to put a figure on what they want from the company in terms of bonus and pay, but said this needs to more accurately reflect the skills that the employees have. The union has been watching developments in South Africa and is worried about Ghana's high levels of inequality, he said.

(Drew Hinshaw in Accra contributed to this report.)

Write to Devon Maylie at [e-mail]

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