The vast majority of South Africa's biggest gold mines have been severely affected by a national strike that began on Tuesday night by nearly 80,000 mine workers.
Of the 23 gold mines targeted by the strike, 17 have been forced to halt operations or have less than half of their workers on duty, according to reports on Wednesday as the strike entered its second day.
There was a glimmer of hope on Wednesday as the leading mine worker union reportedly offered to compromise by cutting its wage demands below its original call for a 60 per cent wage increase, although the details of its new demand were unclear.
The seven gold mining companies – including AngloGold Ashanti and Harmony Gold – have insisted that they cannot offer anything more than a 6.5-per-cent wage increase.
The strike, expected to cost the South African economy about $60-million a day, has dealt another blow to a beleaguered industry that already suffers from rising costs and shrinking production. Some analysts predict that it could become the costliest strike in the country's history. With the two sides far apart, a lockout is also possible.
South Africa's gold industry, by far the biggest in the world in the 1970s, has slipped to fifth place in the list of global gold producers in recent years. The latest strike could further hurt its image among foreign investors, while inflicting heavy damage on the national economy. Direct losses in output by the mining companies are expected to be about $35-million a day.
The strike is led by the National Union of Mineworkers, which represents nearly two-thirds of the 120,000 mine workers in the South African gold industry.
The wage offer of 6.5 per cent by the gold companies would amount to "slave wages," the union said. It warned that the strike could continue until Christmas. And it vowed that the strike "will change the gold-mining landscape forever."
A rival union, the Association of Mineworkers and Construction Union, has made even more radical demands, seeking a wage increase of up to 150 per cent. It too is considering sending its members on strike soon.
The strikes, which have also hit South Africa's construction and auto manufacturing sectors this month, will be watched closely because of the persistent danger of violence. Last year about 50 people were killed in strike-related violence in South Africa's mines, including 34 protesting workers who were gunned down by police in the notorious Marikana massacre.
South Africa's labour unrest is fuelled by anger at the growing gap between workers and the wealthy elite. Unions have complained about the corporate bonuses and multimillion-dollar salaries of the top executives.
But industry leaders have cautioned that the mining sector is in serious trouble, with costs rising as mines are forced to dig deeper to extract resources. "Our most important industry is in crisis and we have not yet found how to stem the tide of destruction," said Mark Cutifani, chief executive officer of Anglo American, in a speech in Johannesburg last week.
"If we lose each other in the current discussions, we will count the costs in mines closed and tens of thousands of jobs lost," he said. "For union leaders, promoting expectations above the capacity of the industry to pay is a dangerous road that may have tragic consequences for employees who don't understand how close we are to economic devastation."
South African president Jacob Zuma urged the two sides to find a solution. "A strike hurts both sides," he said on Tuesday.