UPDATE 2-Transnet meets unions to try end dispute

* Transnet says looking for compromise to end dispute

* Auto industry nears crisis if strike prolonged

* ArcelorMittal South Africa declares force majeure

(Adds fresh quotes, ArcelorMittal, fuel)

By Agnieszka Flak

JOHANNESBURG, May 18 (BestGrowthStock) – South African transport
unions met logistics group Transnet [TRAN.UL] on Tuesday to
resolve a wage dispute that has paralysed port and rail
operations in Africa’s biggest economy and hit fuel supplies.

The strike, now in its second week, has dented exports of
metals, fruit and wine to Europe and Asia and nearly stopped
imports of automotive parts after two-thirds of logistic group
Transnet’s 54,000-strong workforce joined in.

Talks between Transnet and labour failed over the weekend,
despite unions lowering their pay rise demand, but negotiations
restarted on Tuesday under pressure from government and industry
to put an end to the dispute.

“The talks are ongoing. It will definitely be an all-night
thing,” said George Strauss, president of the United Transport
and Allied Trade Union (Utatu).

Transnet would not say if it may be willing to get closer to
the union’s demand of a 12-13 percent pay rise, but said it was
optimistic that a compromise could be reached. In the past,
Transnet has said it could not afford more than 11 percent.

The industrial action is the latest protest in the country
ahead of next month’s soccer World Cup, and FIFA said imports of
some equipment for the event have been affected.

The strike has raised criticism of workers among economists
and the central bank for using the World Cup to push for wage
hikes way above inflation of 5.1 percent.

“While a disrupting strike during the World Cup remains
unlikely, parastatal capitulation to double-digit raises will
stoke inflationary pressures, widen the budget deficit and raise
wage demands in the private sector,” Eurasia Group said.

Economists estimated the impact in the hundreds of millions
of rand, but said it may quickly rise to billions if the strike
drags on this week and if other unions join in support.

The strike, which spread beyond Transnet, has already hit
commuter rail links, leaving millions of passengers stranded.

FORCE MAJEURE

Utatu and the South African Transport and Allied Workers
Union (Satawu), represent 85 percent of Transnet’s workforce.

With nearly two-thirds of Transnet’s workers on strike, the
container sector has been hardest hit so far, officials said.

Car manufacturers were struggling to get parts and to export
their cars, said David Powels, president of the National
Association of Automobile Manufacturers of South Africa.

“Day by day plants are shutting down. In another 2-3 days,
all the automotive companies will largely be shut down because
we cannot secure the inbound logistics chain,” he told Reuters.

Automaker BMW South Africa said it would have a backlog of
2,000 export cars if the strike goes beyond this week.

The automotive industry is one of the country’s largest
manufacturing sectors, and contributed nearly 6 percent to GDP
in 2009, while exports of vehicles and components made up 11
percent of total exports.

So far coal exports to power plants in Europe and Asia have
not been affected, with sufficient stocks at the port.

The strike has slowed down movement of petroleum products to
depots, but there were no reports yet of retail sites running
dry, the South African Petroleum Industry Association said.

ArcelorMittal’s South African unit declared force majeure on
shipments, joining other global metal exporters including Anglo
American Plc’s (AAL.L: ) South African iron ore unit and Xstrata
(XTA.L: ), which said they could not supply their customers.

On Monday, Utatu and Satawu also began a strike over wages
at South Africa’s Passenger Rail Agency (Prasa), halting all
commuter rail operations. Separate talks were being held to
resolve this dispute, Utatu said.

Money

(Additional reporting by Wendell Roelf; Editing by Sonya
Hepinstall)

UPDATE 2-Transnet meets unions to try end dispute