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Gold sector could be hit by South African strikes

A mine worker walks underground in South Deep mine outside Johannesburg June 4, 2010.

Siphiwe Sibeko/Reuters/Siphiwe Sibeko/Reuters

South African gold miners will be the latest to join nationwide industrial action this week when they join thousands of workers already on strike and threaten supply of the precious metal at a time when gold is at record highs.

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 per cent inflation rate in the mid-year bargaining session known as "strike season".

The powerful National Union of Mineworkers (NUM) wants a 14 per cent increase in wages from gold employers - including AngloGold Ashanti , Gold Fields and Harmony , which have offered rises between seven and nine per cent.

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"We are disappointed by the decision taken by the unions. The offers made by employers today were a big jump from where we were the last time and were made as an indication of commitment by employers to reach a resolution with the unions," Elize Strydom, the chamber of mines' negotiator for the gold sector, said in a statement issued late on Monday.

The NUM said it would serve employers with a 48-hour strike notice, which would lead to miners going on strike on Thursday.

Coal miners already walked off the job on Monday, following workers in the diamond, fuel and engineering sectors, although power utility Eskom said there was no immediate danger to supply to its coal-fired plants due to sufficient stocks.

Should the strike be prolonged, it could hit already strained supply of electricity and exports.

Unions and employers in the sector will resume talks on Tuesday in a bid to end the dispute. The NUM has been seeking inflation-busting 14 per cent wage increases, above the employers' offer of seven to 8.5 per cent.

Employers over the past two years have struck wage deals averaging about eight per cent 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.

Unions will also hold talks with employers in the fuel sector, hoping to end a strike which is stretching into its third week and which has left hundreds of pumps dry across the country.

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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.

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