UPDATE 3-SAfrica transport strike to end after new deal

* Transport union says majority of members accepted deal

* Union says workers to resume work on Friday

(Updates with deal, Satawu calling off strike)

By Agnieszka Flak and Olivia Kumwenda

JOHANNESBURG, May 27 (BestGrowthStock) – South African logistics
group Transnet reached a deal with striking workers on Thursday
to end a long-running dispute, but a labour federation
threatened fresh industrial action during the soccer World Cup.

The transport strike, in its third week, disrupted railways
and ports in Africa’s largest economy and affected coal exports
in one of the world’s main suppliers of the power station
feedstock to Europe and Asia. It may threaten the country’s coal
export target of 65 million tonnes this year.[ID:nWEA3967]

The stoppage also dented exports of metals, cars, fruit and
wine to Europe, as well as imports of vehicle parts and fuel,
costing the economy at least 7 billion rand ($890 million) in
lost production and sales.

The South African Transport and Allied Workers Union
(Satawu) said a majority of its members had voted for Transnet’s
new offer, which included a one-off 1 percent payment on top of
an 11 percent wage increase.

“The offer has been accepted … and the understanding is
that the workers will start going back to work tomorrow,” Robert
Mashego, Deputy President at Satawu, told Reuters.

The ruling African National Congress (ANC) had demanded a
quick solution to the standoff, warning the dispute could hurt
the soccer World Cup, which runs for a month from June 11.

Satawu, which represents some 21,000 workers out of
Transnet’s 54,000 staff, had called for sympathy stoppages at
other transport firms, including at the national airline and the
coal export terminal.

While the Transnet action looks to have been resolved,
Labour federation COSATU, which has nearly 2 million members and
is a powerful ally of the ANC, demanded a greater say in
economic policy and hinted at withdrawing from a formal alliance
with the ruling party. [ID:nLDE64Q1D6]

The labour federation also threatened a strike during the
World Cup over sharp power price increases by utility Eskom if a
mediation meeting planned for June 14 fails. [ID:nWEA4058]

COSATU also said it may call a national strike from Oct. 7
if labour brokers, who provide contract workers to companies,
are not banned.


Recent strikes have drawn criticism from economists and the
central bank, which say unions are trying to hold the government
and state enterprises to ransom by staging strikes close to the
World Cup, to squeeze pay hikes above inflation of 5.1 percent.

“We are seeing continued upside pressures on wages in both
the public and private sectors,” said Peter Attard Montalto,
emerging market economist at Nomura International.

“Wage settlements are still unanchored from inflation and
will cause a range of second-round inflation effects through the
second half of the year … leading ultimately to rate hikes.”

Late on Tuesday, the National Union of Mineworkers called
off a strike at Eskom due to start on Wednesday after the
state-owned firm obtained a last-minute court order declaring
the planned industrial action illegal. [ID:nLDE64O2FA]


With a backlog that will take at least a month to clear, the
strike has taken its toll on the country’s mining, transport and
manufacturing industries and hurt producers of perishable goods.
Transnet said that with 65 percent of its workers back on
the job after the company’s bigger union accepted a previous
wage offer, the logistics group had managed to move a backlog of
crucial shipments, including World Cup cargo and jet fuel.

Shipping companies are asking clients to pay a surcharge to
partly recover their losses. Fruit producers began using costly
air freight to export their produce and car manufactures have
opted to fly in some parts to be able to keep production going.

All automotive plants were limping along due to the backlog
at ports, an industry body said. [ID:nLDE64P159]

Fuel imports through South Africa to landlocked Botswana
have fallen by half, but supplies within South Africa itself
have been unaffected.

Analysts said the strike is likely to have long-lasting
consequences on the country’s exports, with South Africa losing
some contracts to other markets such as India or Brazil. Job
cuts may also be looming, they said.

Global miners with operations in South Africa, including
Anglo American Plc (AAL.L: ), Xstrata (XTA.L: ) and the world’s top
steelmaker ArcelorMittal (ISPA.AS: )(MT.N: ) have declared force
majeure on the supply of iron ore, ferrochrome and steel.
— For a Q&A on South African strikes, see [ID:nLDE64O12G]

Investing Basics

(Additional reporting by Peroshni Govender; Editing by James
Macharia and Matthew Jones)

UPDATE 3-SAfrica transport strike to end after new deal