AngloGold Ashanti Ltd. (NYSE: AU) and Gold Fields Ltd. (NYSE: GFI), the world’s No. 3 and No. 4 gold producers, began firing more than 20,000 workers in South Africa after they failed to heed an ultimatum to return to work.
Illegal mining strikes began in South Africa at Lonmin PLC’s (LON: LMI) Marikana platinum mine on Aug. 10 and have spread to gold, iron ore and chrome mines as workers bypassed labor unions to demand higher pay. In the worst of the unrest, police shot dead striking platinum miners at Lonmin’s Marikana mine.
AngloGold said it will begin the process of dismissing about 12,000 miners at its West Wits operation who remained on strike Wednesday afternoon.
The West Wits mines account for 60 percent of the company’s production capacity in South Africa. AngloGold employs about 35,000 people in South Africa.
On Monday, AngloGold issued an ultimatum to miners who have been on strike for almost five weeks to return to work by midday Wednesday or face dismissal.
AngloGold said third-quarter production fell below its previous guidance to 1.03 million ounces following strikes at its mines. The company had said it expected production of 1.07 million ounces to 1.10 million ounces for the quarter. Further details will be provided on Nov. 8, along with the third-quarter financial and operating results.
On Tuesday, Gold Fields fired 8,500 workers at its KDC East mine and gave them 24 hours to dispute their dismissals.
This year’s constant and often-violent strikes have poisoned labor relations and marred the image of Africa's top economy. Latest data suggest that South Africa will face increased competition for investment from its faster-growing neighbors.
Foreign direct investment flows to South Africa tumbled 43.6 percent in the first half of 2012 compared to the same period last year, while FDI to the continent as a whole rose by 5 percent, a United Nations report said on Tuesday.
The International Monetary Fund forecasts South African gross domestic product growth of 2.6 percent this year and recently cut its 2013 growth forecast to 3 percent from a July projection of 3.3 percent.
AngloGold Ashanti Limited (NYSE:AU) shares rose 33 cents to $32.60 in midday trading, while shares of Gold Fields Limited (NYSE:GFI) added 13 cents to $12.06.
Moran Zhang is a finance and economics reporter at The International Business Times. Her work has appeared in the Wall Street Journal Digital Network’s MarketWatch, United...