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China and South Africa to see labour unrest

World Coal,

Labour issues in the coal mining sector could pose challenges in South Africa and China this, according to recent analysis from BMI Research.

In South Africa, upcoming elections in which the ANC, which has ruled South Africa since the end of Apartheid, could lose control of key municipalities, including Johannesburg, are likely to push the ANC into more populist policies – including support for mining unions in wage negotiations.

“We expect the government’s vocal support for labour unions, particularly in wage negotiations, will increase due to a rising challenge from the political left,” said BMI Research.

South Africa’s mining industry already suffers from some of the lowest margins in the world with wages accounting for around 50% - 60% of mining companies’ costs. Should unions seek further wage increases, with government support, it could result in significant mine closures and layoffs.

Meanwhile, in China, attempts by the central government to close and consolidate coal production to help deal with huge overcapacity in its domestic coal industry could see a rise in industrial action in the country.

“Both government efforts at consolidation and company efforts to reduce production costs will be affected by rising tensions among workers,” said BMI Research. Worker demonstrations doubled in Chine in 2015 to 2774, according to figures from the Hong Kong-based China Labour Bulletin, while December 2015 saw a monthly record set.

Increasing bouts of worker unrest may force the central government to relax its plans to cut coal production, extending the oversupply challenge into the medium term.

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