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South Africa’s plans to sell a controlling stake in the largest container port in Sub-Saharan Africa to Filipino billionaire Enrique Razon’s International Container Terminal Services (ICTSI) are facing a significant hurdle as powerful labor unions demand job security provisions.
Powerful labor unions in the country, including the United National Transport Union and the South African Transport and Allied Workers Union, are demanding job security as a condition for the 25-year contract.
The unions, through their general secretaries, have submitted a set of demands to ICTSI and Transnet, South Africa’s state port, and freight-rail company. Key among these demands is a commitment from ICTSI to refrain from any job cuts throughout the entire duration of the proposed 25-year contract.
Unanswered union demands threaten key port transaction
Despite submitting their demands in December, unions claim they haven’t received a response from involved parties. Transnet asserts engagement in discussions with the unions.
Jack Mazibuko, general secretary of the South African Transport and Allied Workers Union, is skeptical about ICTSI agreeing to their conditions. He plans to write to the parties again for a response. A collapse of this transaction could mark a failure in South Africa’s initial attempt to sell an equity stake in a struggling port.
The state of rail and port services by Transnet negatively impacts exports, reduces tax revenue, and hampers economic growth. Last month, Transnet halted the process for a private operator in a vital freight-rail artery. The company is also behind schedule in moving forward with plans for private companies to construct a new port on the northwest coast.
Razon’s billion-dollar fortune takes hit amid labor union uncertainty
With the recent uncertainty surrounding the labor unions’ demands, Razon has seen his net worth decline by $202 million this year. The majority of Razon’s $7.02-billion fortune is tied to his 52-percent stake in ICTSI, owned directly and through holding companies.
Aside from his involvement in ICTSI, Razon’s interests include the majority ownership of Bloomberry Resorts, which controls the Manila gambling complex, Solaire Resort & Casino, as well as investments in gold mining and oil exploration assets.
The outcome of negotiations between ICTSI, Transnet, and the labor unions will not only impact the potential involvement of Enrique Razon’s ICTSI in South Africa’s largest container port but also has wider implications for the nation’s efforts to revitalize its struggling ports and boost economic growth through increased private-sector participation.
