Platinum Strike Talks on Revised Pay Offer Set to Resume

April 23, 2014

Johannesburg-South Africa (Apr 23)  The world’s three largest platinum producers are meeting with union officials to try to end South Africa’s longest mining strike after talks yesterday following an increased pay offer failed to break the three-month deadlock.

The Association of Mineworkers and Construction Union is due to resume discussions with Anglo American Platinum Ltd. (AMS), Impala Platinum Holdings Ltd. (IMP) and Lonmin Plc (LMI), Charmane Russell, a spokeswoman for the producers at Russell & Associates in Johannesburg, said in an e-mail. AMCU President Joseph Mathunjwa said there was nothing to report from yesterday’s session.

The revised pay offer fails to meet union demands, suggesting a resolution may be weeks away, according to JPMorgan Cazenove and Investec Asset Management. The platinum companies say the South African strike has cost them 14.4 billion rand ($1.4 billion) in sales, and workers 6.4 billion rand in wages.

“It is clearly the biggest private sector strike and far and away the biggest mining sector strike” in South Africa, said Andrew Levy, who heads his own labor research company and advises multinationals.

Amplats, as Anglo Platinum is known, and Impala last week proposed raising the cash portion of wages including bonuses and living allowances to 12,500 rand a month by 2017, or as much as 10 percent annually, from 9 percent before. That’s short of the union demand for monthly basic pay excluding cash bonuses of 12,500 rand within four years. South Africa’s inflation rate was 5.9 percent in February.

Longest Strike

AMCU leadership last week wasn’t happy with the companies’ proposals, complaining that they fell “far short” of its demands, Impala spokesman Johan Theron said yesterday.

The strike is the longest for the South African mining industry, said Chamber of Mines Chief Negotiator Elize Strydom, whose body represents producers. A gold strike in 1987 by 200,000 workers lasted three weeks, while about 80,000 AMCU members have downed tools since Jan. 23, she said in an e-mail.

A strike called by the National Union of Mineworkers at Northam Platinum Ltd. lasted 11 weeks before the union signed a two-year deal on Jan. 21 for pay increases of as much as 9.5 percent.

“Getting a decision may take a week or two” for AMCU leadership after many workers returned to their homes far from Rustenburg for the Easter holiday, JPMorgan analysts including Steve Shepherd and Allan Cooke wrote in a note yesterday. “Then, after more than three months of standing, a safe startup of stope faces would take weeks, not days.”

May Election

The strike may last until after South Africa’s May 7 presidential election, Hanre Rossouw, commodities chief for frontier and emerging markets at Investec Asset Management, said by phone yesterday. “For AMCU, if there’s any political platform that they want to use, it would be senseless to give it up before elections,” he said. The union says it isn’t affiliated with political parties.

AMCU leader Mathunjwa “needs a face saver” if the 12,500 rand basic wage demand isn’t met, said Levy, the labor consultant. That could take the form of a one-time payment for miners to return to work. He also said it would be wise for the union to negotiate a clause that would limit or delay companies cutting jobs.

The union is seeking a venue for a meeting of its members at the three companies, Siphamandla Makhanya, an AMCU shop steward, said by phone. “We are prepping for a mass meeting but the date is not yet set,” Makhanya said.

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