Commentary — Public holidays and mining

The Chamber and its members have registered strong disapproval of the state’s action to increase the number of national public holidays to 12 days, noting that this will incur significant costs in the industry and jeopardize struggling mining operations.

Still recovering from the effects of a series of work disruptions arising in the runup to the South African national elections (last year), the gold mining industry in particular is highly sensitive to factors which could undermine productivity and thereby raise working costs.

Concern was voiced by Chamber President Jurie Geldenhuys, in his end-of-term presidential address to the 1994 Chamber annual meeting. He said industry was “alarmed” at the government’s action on holidays as this would triple the number of days which the mining industry would be obliged to recognize as paid holidays.

Prior to the legislation’s enactment, mining was exempted from treating certain holidays as industry leave days in order to limit production disruptions to four officially recognized mining industry holidays per year.

The legislation of 12 holidays (across all industries) is expected to extract heavy costs on both mining and government. The Chamber’s Economics Services has estimated that if no work were to be undertaken on all 12 holidays named in the new bill, the South African economy would stand to lose 902 million rand in foreign exchange, 155 million rand in taxes and some 437 million rand in lost revenue for companies supplying gold mines . . .

The projections illustrate how sensitive the gold-mining industry is to changes in production levels. (A positive aspect is that the reverse is also true. For example, if the restrictions barring mining on Sunday were to be abolished, production would improve.)

Average sustainable underground capacity utilization on Chamber member gold mines is currently estimated at 80% of total installed infrastructure capacity. The latter is rated at 104,000 tons per annum, indicating a shortfall in currently realizable capacity of some 21,000 tons per annum.

Evaluations indicate that as much as 14% of this capacity could be productively tapped if mining on Sunday received the nod from authorities (assuming maintenance of the gold price at current levels) . . .

— From a recent newsletter of the Chamber of Mines, published in South Africa.