SA platinum mine workers start wage strike

By bne IntelliNews January 23, 2014

Top South African platinum producers Anglo American (Amplats) and Lonmin announced that their workers who are members of Association of Mineworkers and Construction Union (AMCU) have gone on strike as of January 23.

Amplats said that workers at Rustenburg, Union and Amandelbult mines, went on strike, while its Mogalakwena mine is operating properly. It gave no estimations on the expected losses in output and revenue. Lonmin said it expects losses of 3,100 platinum ounces per day during the strike. According to a Reuters report, another top platinum producer – Implats, closed its mines, processing units and smelter at Rustenburg, northwest of Johannesburg, on Wednesday ahead of the strike to ensure the safety of its employees.

AMCU sent earlier this week a strike notice to the top platinum and gold producers in the country, seeking an entry salary of ZAR 12,500 (EUR 837), more than double the current level. According to the platinum makers, this request is unaffordable and unrealistic.

On Wednesday, the three companies said in a joint statement that they have offered to increase by between 7.0% and 8.5% the wages of their workers and were also ready to increase the accommodation and other allowances.

In 2012 and 2013, platinum producers lost a combined 879,400 ounces of production due to strikes, which resulted in lost revenue of ZAR 12.54bn. According to the companies’ estimations, the workers have also lost ZAR 1.18bn in wages.

South Africa’s finance minister Pravin Gordhan said earlier this week that the country cannot afford more mine labour unrest. Gordhan added that the country can least afford another round of strikes that would destabilise the platinum sector, which has had increasing difficulties over the last 18 months.

The strike could lead to downgrades by the ratings agencies Moody's, Fitch, and Standard and Poor's. According to a Moody’s report, issued earlier in January, weakening productivity and strike-related business losses, exacerbated by declining terms of trade, are the major credit challenge for South Africa.

The militant AMCU has become the dominant union in South Africa’s platinum sector, following a violent turf war with NUM, which caused a wave of wildcat strikes in the gold and platinum sectors in 2012.

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