About 80,000 gold miners in South Africa walked out on strike on Tuesday night, raising fears of renewed violence in the crisis-hit industry and underlining the government's dwindling authority.

President Jacob Zuma admitted that he could only plead with companies and unions to find a peaceful solution and avoid seriously damaging the economy, already hit by sluggish growth and a contagion of strikes in other sectors.

But the parties remain poles apart. The National Union of Mineworkers (NUM) accused captains of industry of "arrogance" forcing it to embark on nationwide industrial action "that will change the gold mining landscape forever".

The dispute over pay comes a year after 46 people died during unrest in the platinum belt and amid signs that the century-old mining industry model is broken. For years South Africa was the world's top gold producer, accounting for more than two-thirds of output in 1970, but it has slipped to fifth place with just 6% of global production.

The NUM is demanding rises of up to 60% after talks broke down. The union, which represents about 64% of South Africa's 120,000 gold miners, said it rejected "with contempt slave wages as represented by an increase of a meagre 6.5% or R300 (£18.68) per month". It claims bosses have continuously awarded themselves huge bonuses.

"The NUM has noted government's wishes that industrial action be avoided and dares the state to explain which side it is on," spokesperson Lesiba Seshoka added. "The union is aware of the devastating impact industrial action would have on the economy, which is largely a white man's economy with no benefits for poor black mineworkers."

A wave of strikes across South Africa, including in the auto industry and construction sectors, has sent the rand to four-year lows. A shutdown in gold production will cost the country more than £22m a day, according to estimates, and the NUM has suggested it could go on until Christmas.

Zuma urged mining houses and unions to reach a wage agreement soon, conceding: "Government can only appeal to parties to find a solution. I don't think we can tell the management of the mine 'accept what the workers are saying', nor can we tell the workers [that].

"We just appeal that the two parties must find one another because a protracted strike is not helpful to the country nor to the industry itself. The strike hurts both sides. Both sides must be ready to give and to take as well."

But the troubles afflicting mining over the past two years, including the police massacre of striking workers in Marikana and its aftermath, have exposed the limitations of the African National Congress.

Aubrey Matshiqi, a political analyst and research fellow at the Helen Suzman Foundation, said: "The sense I get is the government is becoming increasingly helpless. What might save the mining sector is the relationship between employer and union: you need courage on both sides to be very honest about their needs and willingness to sacrifice. The worst thing they can do is to marry themselves to short-term gains."

All is not yet lost for the industry, Matshiqi insisted. "It's a crisis but I don't think it's inevitable that it will deepen. A deepening is avoidable depending on how the protagonists conduct themselves."

Even the NUM's demands are eclipsed by the more radical Association of Mineworkers and Construction Union, which is pushing for 150% pay rises, claiming that the industry is still locked into apartheid-era pay structures despite 19 years of democracy. The gold mining companies are the London-listed AngloGold Ashanti, Gold Fields, Rand Uranium, Harmony Gold, Evander Gold, Sibanye Gold and Village Main Reef. They say the demands are unrealistic, given rising costs and falling bullion prices.

Matshiqi warned: "Listening to the unions this morning, I heard a hardening of attitudes which may facilitate violence. If one union accepts the offer and the other doesn't, violence may be the way one union thinks it can keep the strike going. This calls for a high level of maturity on both sides." rest.