UPDATE 3-South African strike hits ferrochrome exporters

* About 85 percent of Transnet’s 54,000 workers on strike

* Rail and port workers strike to push pay demands

(Adds Xstrata, Samancor ferrochrome force majeure)

By Agnieszka Flak

JOHANNESBURG, May 12 (BestGrowthStock) – A nationwide, indefinite
transport strike paralysed South African railways and ports and
forced mining groups Xstrata and Samancor to declare force
majeure on Wednesday on ferrochrome exports.

The three-day-old strike at state logistics group Transnet
[TRAN.UL] widened after the company’s biggest union joined in
what is the latest public protest ahead of next month’s World
Cup soccer tournament in South Africa.

Xstrata said it would halt shipment of ferrochrome, a key
ingredient in stainless steel, and chrome ore.

“The situation is still being assessed, until we’ve got a
better idea of what’s happening, it’s going to be difficult to
ascertain the impact,” said Pam Bell, a spokeswoman at
London-listed Xstrata (XTA.L: ).

Samancor, the world’s 2nd-biggest ferrochrome producer, also
declared force majeure, traders said. [ID:nLDE64B2B7]

Transnet operates no passenger services, but a prolonged
strike could affect imports, internal fuel supplies and exports
of fresh fruit, grains, ferrochrome, iron ore and coal.

South Africa is one of the world’s biggest coal exporters,
mainly to power stations in Europe and Asia.

A train transporting fuel from Durban on the east coast to
the inland market derailed early on Wednesday in an incident
which Transnet said was “sabotage”, but no one was injured.

“Nothing is moving today,” George Strauss, president of the
United Transport and Allied Trade Union (Utatu), told Reuters.

Transnet said it was willing to discuss alternative options
other than a further wage raise in order to end the strike.

“We do recognise that we may need to explore other elements
that may not be limited to the wage offer, in order to resolve
the dispute,” the company said in a statement.

Two unions representing 85 percent of Transnet’s 54,000
workers have rejected a pay offer of 11 percent and want a 15
percent rise — well above the inflation rate of 5.1 percent.

The other union, the South African Transport and Allied
Workers Union (Satawu), said workers would organise marches in
Johannesburg, Durban and Polokwane from Wednesday.

Thirteen people were arrested in Durban after a protest
turned violent on Monday.

STOCKPILES

Transnet, and commodities and fuel producers said they will
be able to supply customers for days due to stocks at ports.

Fuel producers, including BP (BP.L: ), Royal Dutch Shell
(RDSa.L: ), Engen and Chevron (CVX.N: ), said they have not yet been
hit, but the South African Petroleum Industry Association
(SAPIA) said some impact was expected from Thursday.

Kumba Iron Ore, a unit of Anglo American (AAL.L: ), said it
was “severely impacted” by the strike, which has limited its
ability to use the railways to send iron ore destined for export
to Saldanha Bay, a harbour northwest of Cape Town.

ArcelorMittal’s South African unit (ACLJ.J: ) said it was
using stocks for now as delivery of iron ore had been hit.

Coal producers said they may be forced to curtail production
if the strike is prolonged and their depots at mines fill up.

“Once we become too full, we will have to start cutting back
on production,” said Mxolisi Mgojo, head of the coal unit at
diversified miner Exxaro (EXXJ.J: ). He said Exxaro would carry
out some maintenance during the strike to minimise the impact.

Coal traders said the impact on exports was likely to be
minimal as stocks at the Richards Bay Coal Terminal (RBCT) are
likely to last for weeks. If the strike goes on longer, miners
might need to use expensive trucks to transport their coal.

Other industries, including exporters of fresh fruit, said
they were already feeling the pain. [ID:nLDE6490H4]

Power utility Eskom [ESCJ.UL] said the strike would have no
impact on the transport of coal used to power its plants, since
only small amounts of coal were carried by rail, with the rest
supplied by conveyor belts directly from mines. [ID:nLDE6461KZ]

Investing

(Additional reporting by Olivia Kumwenda in Johannesburg and
Jackie Cowhig, Eric Onstad, Karen Norton and Michael Taylor in
London; Editing by Mark Trevelyan)

UPDATE 3-South African strike hits ferrochrome exporters