Harmony Gold signs historic 5-year wage deal: 'Unprecedented in SA mining sector'

Harmony Gold has announced the conclusion of a 'landmark' five-year wage agreement with labour unions.

It will result in an increase of approximately 6% per annum over the half decade.

Harmony CEO Peter Steenkamp noted that this 'milestone' agreement was reached three months before the expiry of the existing one.

"For the first time in our 73-year history, we have concluded a five-year wage agreement with all of our labour unions."

"This is testimony to the strength of our labour relations and ensures stability and continued certainty on our fixed labour costs for the next five years."

Peter Steenkamp, CEO - Harmony Gold

In addition to the basic wage hikes, agreement was reached on increases to monthly housing and living-out allowances over the five-year period.

A number of non-wage related issues were also agreed, which include upping guaranteed minimum severance and medical incapacity payments, maternity and paternity leave.

While Harmony will certainly feel this increase on their bottom line, they'll be valuing the fact that they can lock in to a five-year deal comments mining expert Peter Major.

"It used to be a miracle when we could see a three-year wage agreement with the mineworkers unions, so to think you've got five years... and know it's going to be inflation plus 1/1.5% - you can now plan around that."

"It's almost too good to be true, especially because we didn't see any negative headlines."

Peter Major, Director: Mining - Mergence Corporate Solutions

Negotiations in South Africa's mining sector are historically known to be robust, so this agreement justifies some pats on the back on both sides, Major says.

"I think both sides are very mature, very experienced... and I think they understood the finance very well to settle like this."

"I think it's unprecedented in the mining sector in South Africa."

Peter Major, Director: Mining - Mergence Corporate Solutions

Considering the current surge in gold prices, he bemoans the fact that only a fraction of the country's gold mines are still in production.

"These are gold prices we never dreamt we'd see in the 80s and 90s and here they are, and we're not really ready for them."

Peter Major, Director: Mining - Mergence Corporate Solutions