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Labour unrest forces Harmony Gold to close South African mine

Could there be a repeat?

Harmony Gold Mining (NYSE:HMY) announced Thursday it has closed its Kusasalethu mine in South Africa a day earlier than planned for the festive holiday season due to violent demonstrations following the suspension of 578 workers.

Harmony sanctioned the miners, including some contractors, for taking part in an illegal strike at the gold mine, about 75 kilometers west of Johannesburg, on Dec. 15.

According to The Citizen, a company spokeswoman said the protesters damaged some surface equipment on Thursday morning and fired gunshots at security guards, who returned fire with rubber bullets. Five workers were injured in the process, she added.

Police are now at the mine to control the crowd and to ensure the safety of all employees, Harmony said.

“We have made it clear that no violence will be tolerated and to ensure the safety of our employees it has become imperative to close the shaft until the labour issues have been resolved,” said in a statement Tom Smith, Harmony’s Chief Operating Officer.

The Kusasalethu mine accounted for about 14% of the firm’s total gold output with production reaching 181,105 troy ounces of gold during the financial year ending June 30, 2012.

The violence at Harmony’s mine is the latest episode of a long and deadly saga of strikes in South Africa’s mining industry, which caused the death of 34 people protesting at the platinum miner Lonmin’s (LON:JSE) Marikana mine in August.

The country’s mining sector, which accounts for 6% of gross domestic product, was repeatedly hit this year by disputes over low wages that reflect widespread anger over enduring inequalities.

The other major problem currently affecting South African mining is the ongoing talks of mine expropriation, coming from local political figures, such as Julius Malema, an expelled youth league leader for the incumbent African National Congress.

Image: Workers from the Anglo American Platinum mines on strike from archives.


South African strikes drop annual mining production 8.3% >> >>

South Africa’s economic outlook darkens over mining turmoil >> >>

Lonmin’s Marikana mine controversy far from over: survivors allegedly “shot again” >> >>