Platinum Producers See Miners Back Next Week If Deal Taken

June 14, 2014

Johannesburg-S.A. (June 14)  The world’s largest platinum producers are hoping workers will return to their South African mines as soon as next week should they settle a 20-week pay strike with the biggest union.

The Association of Mineworkers and Construction Union is canvassing members for a second day to gauge support for pay proposals made by Anglo American Platinum Ltd. (AMS), known as Amplats, Impala Platinum Holdings Ltd. and Lonmin Plc, (LMI) union President Joseph Mathunjwa said by phone. The sides were “close to one another,” he said after the first day’s meetings. There are some conditions his organization had to discuss with employers in talks planned for the weekend, he said.

Impala, the second-largest producer, has shut its mines completely since more than 70,000 AMCU members walked off the job on Jan. 23. Lonmin, the third-biggest, had attendance of less than 20 percent. The three companies said they have lost 22.9 billion rand ($2.1 billion) in revenue in the longest and costliest strike in South Africa, source of about 70 percent of the global platinum mined.

“Our thinking is that in the next week people will return, then giving it another week or two for medical” checks on workers, Sue Vey, a spokeswoman for Lonmin, said by phone. “July 1 is the earliest to begin mining.”

Employees have forfeited 9.9 billion rand of wages because of the deadlock that contributed to a contraction in gross domestic product from January to March, the first drop in South Africa’s GDP since a 2009 recession.

Much Progress

“We’ve made such a lot of progress over the past 24 hours, it will be difficult to believe we’ll stumble over the last hurdle,” Johan Theron, a spokesman for Impala (IMP), said today by phone. The companies want to meet the AMCU for further talks today and will continue contact with the union over the weekend, Theron said.

Amplats rose 0.5 percent to 472 rand in Johannesburg. Impala added 0.8 percent to 113.95 rand, while Lonmin slipped 3.6 percent in London trading to 248.50 pence after surging 8.9 percent yesterday.

Platinum for immediate delivery fell 0.5 percent to $1,436.63 an ounce at 5:02 p.m. in London after dropping 2.6 percent yesterday, while palladium declined 0.4 percent to $818 an ounce, extending yesterday’s 4.6 percent decrease.

Member Consultation

Mathunjwa yesterday consulted members at Amplats, Impala and Lonmin operations around Rustenburg, about 120 kilometers (75 miles) northwest of Johannesburg. The union will today meet workers at the Amplats mines near Thabazimbi in Limpopo province, Mathunjwa said by phone.

While the companies said they would elaborate on their proposal once the union had responded, details emerged at the AMCU mass meeting at Impala. The lowest-paid workers are in line for increases of about 18 percent in their basic pay.

Impala proposes improving the 5,500 rand basic monthly wages of the lowest-paid by 1,000 rand in the first and second years of a pay agreement, AMCU Treasurer Jimmy Gama told workers, reading out a letter from the company. That compares with a previous Impala plan to raise base salaries by 580 rand in the first year and 680 rand in the second.

Impala, which operates the world’s largest platinum mine, also proposed an increase of 950 rand a month in the third to fifth year of the plan, compared with 750 rand in the third year, 840 rand in the fourth, and the 900 rand in the fifth put forward previously, he said.

Conditions Raised

Members have raised conditions on issues including the length of the agreement, back pay, increases in living-out allowances and the reinstatement of jobs, Mathunjwa said.

The conditions are “not a major stumbling block” for a settlement, Mathunjwa said today on Johannesburg-based Talk Radio 702.

The operations of Amplats, as the largest producer is known, are the least-affected of the three companies as mines that accounted for more than half of its output in 2013 were not curtailed by the industrial action. It also recorded attendance of 20 percent to 50 percent at the shafts where the AMCU’s members walked out.

Amplats expects its strike-hit mines to return to normal production in three to six months, depending on “how the return occurs,” Mpumi Sithole, a spokeswoman for the company, said by e-mail.

Source: Bloomberg

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