Wage talks between state-owned South African port and rail operator Transnet SOC Ltd. and its biggest labor group have deadlocked, as the company signed a three-year agreement with a smaller union.

The United National Transport Union rejected an offer by Transnet management for a wage increase of 6% annually in the first two years, and 5.5% in the third year, the company said in a statement. The South African Transport and Allied Workers’ Union accepted the deal.

“Transnet considers the offer to be reasonable and fair given the current financial and operational challenges and takes into consideration the cost of living, the wellbeing of employees, job security and the organization’s long-term financial sustainability,” it said.

UNTU is demanding a one-year deal with a 10% increase — in addition to housing and medical allowances — and declined to take the final offer by Transnet to its members, the group said in a statement late Wednesday after a 13-hour mediation process. It also called for a conclusion to the negotiations before April. 

The majority union at Transnet with more than 25,000 members is declaring a dispute in the talks and is “prepared to take to the streets” for a better deal, UNTU said. 

Transnet remains “positive” all employees will accept the deal, according to the company.