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Zuma seeks mines stability, S.African rand plummets

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(Globalpost/GlobalPost)

South Africa's rand hit the 10.0 rand against the dollar mark Thursday as President Jacob Zuma moved to restore investor confidence by urging stability in the mining sector after economic growth hit a fresh low.

The currency which has been on a downward slide in recent weeks, extended its loss to its lowest level against the dollar in four years.

The downward spiral has seen the rand loose 18 percent of its value since the start of this year.

Gross Domestic Product figures released this week showed that Africa's wealthiest economy grew by just 0.9 percent in the first quarter as the country faces the prospect of renewed labour unrest in the mining sector.

Zuma said the damaging low growth figures means that "we must strengthen economic performance and increase the rate of investment," Zuma told a news conference.

"Growth in the remaining three quarters of the year will have to be much higher, for us to achieve the projected annual growth of 2.7 percent."

Opposition and analysts said Zuma's speech lacked details of concrete action to rein in the economic slide.

The vital mining sector, which rakes in around 60 percent of export earnings, has seen a rash of wildcat strikes sparked by wage demands and union rivalry.

"Everything we do must be designed to strengthen and stabilise the sector," said Zuma.

The industry was hit by a crippling wave of unrest last year, sparked by police shooting dead 34 protesters at platinum giant Lonmin during an illegal wage strike.

This year, as the wage bargaining season begins, one union has demanded pay hikes of up to 60 percent for some workers.

"We call for fair and expeditious settlements of wage negotiations that can contribute to the attainment of the country's job creation and job retention goals," said Zuma.

He announced that his deputy Kgalema Motlanthe, was leading a panel of ministers in talks with business and labour in a bid to address the mining sector troubles.

Zuma flies out to Japan on Thursday for an African development conference and said upon his return next week he will hold talks with leaders in the sector.

The World Bank added to the gloom of the South African economy on Wednesday by lowering its growth forecast to 2.5 percent for the year down from 3.2 percent with a warning on labour volatility on mines.

Noting last year's disruptive relations, particularly on wage bargaining outside standard channels, the lender said labour market ties could have a lasting effect.

"Firms are delaying investment and hiring decisions-and as a result slowing the rebound of private investment and household consumption," it said.

Last year's wave of militant shut downs across miners helped to push growth downward from 3.5 percent in 2011 to 2.5 percent last year.

The year has already seen worrying signs, from strikes to rubber bullets being fired at mines.

A turf rivalry is being waged between the main National Union of Mineworkers (NUM) and a smaller upstart Association of Mineworkers and Construction Union (AMCU).

Earlier this month, the world's number one platinum producer Anglo American Platinum announced 6,000 lay-offs -- raising the risk of renewed union unhappiness.

Sibanye Gold on Wednesday also announced it will shed 1,110 jobs.

But the main opposition, the Democratic Alliance castigated Zuma for not doing enough to address the economic downturn.

"Instead of a plan of action...we received only more of the vague reassurances which have characterised his term in office," said the DA's parliamentary leader Lindiwe Mazibuko.

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http://www.globalpost.com/dispatch/news/afp/130530/zuma-seeks-mines-stability-safrican-rand-plummets