South African mining companies and trade unions risk destroying the country’s biggest export industry and threatening its credit rating should wage talks fail, according to the Chamber of Mines.

“Failure is not an option as this will accelerate the creeping destruction of one of South Africa’s most important industries and inhibit the investment support that the country so urgently needs,” Bheki Sibiya, the Chamber’s chief executive officer, wrote in the Johannesburg-based Business Day newspaper.

Falling precious-metal prices and higher costs have squeezed South Africa’s gold and platinum producers, who are facing demands from labor unions to as much as double wages for entry-level workers. A year ago, strikes spilled over into violence that led to the deaths of 44 people and shaved 0.5 percentage points off economic growth.

Gold dropped 23 percent in the second quarter, the biggest three-month slump on record, while platinum is down 11 percent this year. More than half of South Africa’s gold and platinum operations are “in loss-making positions,” Sibiya said.

via South African Mine Industry at Stake in Wage Talks, Chamber Says – Businessweek.