South Africa

Transnet strike drags on

Thulas Nxesi

A strike by South African ports and freight-rail workers entered a sixth day on Tuesday as talks to end the labour action that is curbing mineral exports remained at an impasse.

Officials from state-owned Transnet met representatives of labour unions on Monday, and they agreed on picketing rules for the strike that began on 6 October.

Labor Minister Thulas Nxesi said the negotiations, which are being facilitated by the Council for Conciliation, Mediation and Arbitration, are deadlocked, Johannesburg-based newspaper Business Day reported.

The “parties remain committed to reaching an amicable solution with regards to the wage negotiations” and are considering alternative proposals, with another meeting scheduled for Wednesday, Transnet spokeswoman Ayanda Shezi said in a statement. The company had earlier said talks would resume on Tuesday.

Workers represented by unions, including the United National Transport Union and the South African Transport and Allied Workers Union, halted work to demand Transnet raise its wage offer of as much as 4%. Employees are demanding increases of 13.5%, which compares with annual inflation of 7.6%.

Force Majeure

Transnet, which operates the nation’s industrial harbours, freight-rail network and fuel pipelines, has declared force majeure on shipments because of the labour action.

South Africa’s shipments of coal to Europe jumped eightfold in the first half of 2022, and the crisis may throttle exports.

The strike will also curb overseas sales of other bulk commodities, including iron ore, chrome and manganese, with key producers like Kumba Iron Ore warning on Monday that export sales may be cut by more than half.

Besides a lack of energy security, a weak business climate, logistical constraints, and a sub-optimal freight-rail network have been identified by the South African cabinet as impediments to economic growth.

Protests along major arterial routes and damage to infrastructure have also made the nation’s transport network unreliable, Human Settlements Minister Mmamoloko Kubayi said in August.

Existing logistics constraints at Transnet are expected to cost South Africa’s mining industry R50 billion in lost opportunities this year, according to the Minerals Council South Africa.

The strike is costing the economy about R6 billion a day, Busi Mavuso, the chief executive officer of lobby group Business Leadership South Africa, said in a note on Monday.

The strike is also testing the government’s resolve to rein in state wages. The remuneration of South African state employees accounts for almost a third of total state spending, and keeping it in check is key to the National Treasury’s plans to reduce its budget deficit and bring runaway state debt under control.

In July, state power utility Eskom signed a pay deal with unions for a 7% increase to end an impasse that triggered a week of illegal protests and deepened electricity outages.

Freighters are looking to alternative routes in neighbouring Mozambique and Namibia to ship their goods, Catherine Larkin, a spokeswoman for the South African Association of Freight Forwarders, said in response to queries.

“Both the Road Freight Association and the South African Association of Freight Forwarders and ships are simply bypassing our ports, using Maputo and Walvis Bay and growing the business of other ports while we lose out,” she said.