The South African Rand tumbled to a fresh four-year low against the US Dollar and weakened against all of its most traded peers as fears rise that a repeat of last year’s violent worker protests could occur, as tensions increase over big wage demands from miners.
The National Union of Mineworkers (NUM) has called for pay hikes of up to 60% a demand that is likely to be denied as South Africa’s mining companies struggle with the affects of a fall in commodity prices and a weakening national economy. Gold fell for an eight straight session, slumping to its lowest level in over a month and is expected to decline further if the US Federal Reserve chooses to wind back its economic stimulus programme tomorrow.
Spot gold is currently fetching around $1,350 an ounce, down close to 20% so far this year, and South Africa’s mines, the deepest in the world, are hard pressed to turn a profit at these levels.
“If you look at the all-in costs for South African gold miners, including capex (capital expenditure), the break-even costs right now are anywhere between $1 100 an ounce and $1 400 an ounce,” said David Davis, mining investment analyst with SBG Securities.
The NUM union has said that it was seeking an entry-level minimum monthly wage of R7 000 for gold and coal surface workers and R8,000 for those underground. The latter would represent a 60% rise from the current minimum wage of R5,000 a month. NUM also said it wanted 15% increases for “all other wage categories,” meaning more experienced and skilled workers.
The ongoing turf war between rival unions has also raised the prospect of further labour unrest.
The ongoing weakness of the Rand is also expected to raise inflation, which is already running close to 6%.
Current South African Rand (ZAR) Exchange Rates
The South African Rand/US Dollar Exchange Rate is currently in the region of: 0.1053
The South African Rand/Euro Exchange Rate is currently in the region of: 0.0818
The South African Rand/Pound Sterling Exchange Rate is currently in the region of: 0.0693
The South African Rand/Australian Dollar Exchange Rate is currently in the region of: 0.1075
(Correct as of 09:45 am GMT)
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