South Africa port, rail workers threaten strike after rejecting wage offer

Labor unions at South Africa’s state-owned ports and freight-rail company threatened to begin a strike this week after rejecting its latest wage offer, a move that may curb shipments of coal and other minerals.

The United National Transport Union served Transnet SOC Ltd. with a 48-hour notice that its members plan to stop work from Oct. 6, according to a statement. The South African Transport and Allied Workers Union said separately that it will notify Transnet today of its plan to begin a strike on Oct. 10.

Transnet’s rail and ports facilities are key to South African exports of bulk commodities such as coal, iron ore, chrome and manganese. Producers including Thungela Resources Ltd. and Exxaro Resources Ltd. are already unable to exploit the full potential offered by a surge in global demand for coal burned at power plants because of a lack of rail capacity at Transnet.

“Thungela is aware that Transnet is in negotiations with labor unions and according to our knowledge these negotiations are still ongoing,” a spokeswoman said in an email.

Transnet said its offer to labor unions of a 1.5% pay increase and a once-off payment of 10,000 rand ($563) before tax is reasonable as it takes into account the company’s “financial and operational challenges.”

Transnet’s pay increase must be aligned with the rise in the cost of living and current inflation, the UNTU said. Annual inflation in South Africa is currently 7.6%.

Transnet applied to the Commission for Conciliation, Mediation and Arbitration to try and break the deadlock with the labor unions. A mediation process is expected to start on Oct. 12 and won’t affect the strike action, Satawu said.

“Transnet has consistently made the point that its wage bill currently makes up over 66% of monthly operating costs,” the company said in a statement. “This is not sustainable, particularly given the current operational and financial performance.”