Jobs Threat Rises as Platinum Halt Endures, Minister Says

June 10, 2014

Johannesburg-S.A. (June 10)  The chances of job cuts at South African mines owned by the three largest platinum producers are rising as parties fail to resolve a pay dispute that’s crippled operations for 20 weeks, the mineral resources minister said.

“The longer the strike goes on, the more likelihood of such dismissals,” Ngoako Ramatlhodi told reporters today in Pretoria, the capital. “At some point you’re not going to be able to sustain your operations. The situation is grim and quite serious.”

Ramatlhodi led a government team that tried to broker an end to the pay impasse that’s halted most local operations owned by Anglo American Platinum Ltd. (AMS), Impala Platinum Holdings Ltd. (IMP) and Lonmin Plc (LMI) since Jan. 23. The producers have lost 21.9 billion rand ($2 billion) in revenue, making this South Africa’s longest and costliest mining strike. The talks ended without resolution yesterday.

The Association of Mineworkers and Construction Union, the dominant labor representative at the companies’ mines, wants basic pay of the lowest-paid underground employees to be more than doubled to 12,500 rand a month by 2017. The companies have said that’s unaffordable, offering increases of as much as 10 percent and including allowances for housing in the figure.

As of June 6, the main outstanding issues in the talks were how long it would take for the companies to reach the 12,500-rand wage and whether to include a housing allowance as part of the basic pay, Ramatlhodi said. The AMCU said it would only include an accommodation grant against delivery of homes by the government, which the state has pledged to fast-track.

Failed Attempts

Repeated attempts have failed to engineer a breakthrough in the dispute that has idled 60 percent of output in the largest platinum-producing country. Negotiations between the sides earlier crumbled under meditation by the Commission for Conciliation, Mediation and Arbitration.

Later bilateral meetings ended in the companies breaking off discussions and putting a pay offer directly to employees, a move that the union sought to block in unsuccessful legal action. A labor court judge also took the unusual step of mediating company-union talks.

“The parties failed -- I didn’t fail,” Ramatlhodi said. “But they left this meeting yesterday saying they will continue exploring” a resolution, he said. “We hope the parties will go back to court.”

His role was to create an environment conducive for the parties to resume talks, following the prior breakdown. “I sincerely believe we have achieved that,” he said.

Reviewing Options

The companies are reviewing their options after the government-brokered talks failed, they said in a joint statement yesterday.

Anglo American Platinum last year fired about 3,300 workers, with a further 1,500 employees applying for severance packages, as the world’s biggest producer sought to revive profitability. The company had initially planned to cut 14,000 positions and scaled back these plans after complaints from the government and unions.

“We’ve already seen closures and cutbacks at Amplats, Lonmin and most of the junior producers, and with up to 50 percent of South African production unprofitable, we’ll certainly see more,” Hanre Rossouw, commodities chief for emerging markets at Investec Asset Management, said in an e-mail. “Tragically, this continues to be a fight about a bigger slice of a much smaller pie. Some estimates put potential further job losses at 15,000 to 20,000, with nearly 20,000 jobs already lost to date.”

At Lonmin, where no production is taking place, jobs will be at risk, said Happy Nkhoma, a spokesman for the world’s third-biggest producer of the metal that’s used to make jewelry and converters that reduce harmful emissions from vehicles.

“We are going to have a very difficult time ahead regardless of the strike,” because of reduced profit margins and the costs involved in restarting production, he said in an interview on Johannesburg-based SAFM radio. “It’s very likely that jobs are going to be at risk.”

Source: Bloomberg

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