JOHANNESBURG (miningweekly.com) – South Africa’s mining industry was doomed if ‘crazy’ wage increases continued to be paid and productivity declined, Gold Fields CEO Nick Holland said at the weekend.

Speaking at a media roundtable coinciding with the release of the company’s first-quarter results, Holland said productivity kickers needed to be linked to increases higher than the consumer price index.

“We can’t continue giving double-digit increases when productivity is declining. That’s not sustainable,” he said in response to Mining Weekly Online (also see attached video).

The net earnings of the 9 000-employee, 125-year-old Gold Fields declined R140-million to R236-million in the three months to March 31, from R376-million in the December 2012 quarter and R381-million in the March 2012 quarter.

If unions succeeded again in bashing companies into paying productivity-bereft double-digit increases, those companies would have to emulate the retrenchments that Anglo American Platinum (Amplats) announced on Friday.

Following protracted bilateral consultations with the Department of Mineral Resources (DMR) over its contentious restructuring plan, Amplats cut 6 000 jobs, consolidated its Rustenburg operations into three operating mines and divested its loss-making Union mine.

“If there is no solution, what Amplats has done will have to be replicated by other mining companies until nobody's left standing,” Gold Fields CFO Paul Schmidt warned.

South African mining industry needed to devise a strategy that gave the employees more pay while simultaneously boosting company productivity and providing more taxes for the fiscus.

The industry needed to get around the same table to work out a solution, which needed to include reskilling programmes for employees that were surplus to current requirements.

Trying to divvy up different pieces of a shrinking pie left only winners and losers, and companies could not continue to suffer losses.

Productivity had declined over ten years while wages had increased.

“If we can’t increase productivity, it’s all an exercise in futility. All we’ll be doing is hastening the end of the game,” Holland warned.