Implats boss issues labour unrest alertComment on this story
Impala Platinum (Implats) has warned that industrial action at platinum mines, that resulted in the death of workers at its operations and those of rival Lonmin, could become more widespread.
A violent six-week strike at Implats’ Rustenburg operations early this year sliced 21 percent off its full-year output and, combined with declining metals prices, led to a sharp cut in its dividend, to R1.95 a share from R5.70 last year.
“The platinum industry is experiencing increased levels of industrial action, as witnessed at both Impala Rustenburg at the beginning of this year and more recently at Lonmin, with the associated tragic loss of life. These developments pose a significant risk to the industry,” said Implats’ newly installed chief executive, Terence Goodlace.
Describing the labour relations at Implats’ operations as “relatively stable”, Goodlace said the trade union rivalry that sparked the strike at both its operations and Lonmin’s was still “fairly volatile”.
A bitter turf war between the National Union of Mineworkers and rival Association of Mineworkers and Construction Union has already spilled over to surrounding mines in the Rustenburg area and analysts are worried about contagion hitting gold producers.
The platinum price has leapt to a three-month high on the threat that production in South Africa, which supplies 80 percent of the world’s platinum, could be disrupted indefinitely.
Three lives were claimed during the strike at Implats in January and February. The action cost the company, which produces 30 percent of global platinum, 120 000 ounces in lost production and translated into R2.8 billion in lost revenue.
“We are trying to restore production levels. We were hurt by the strike, and the build-up thus far to pre-strike levels has been a lot slower than anticipated.”
Production for the 2012 financial year came in at 1.45 million ounces and Implats is now unlikely to hit its 2014 target of 2 million ounces.
South Africa’s platinum industry is struggling to survive as input costs, such as electricity and labour, climb and the platinum price falls.
The flaring labour unrest and concerns over South Africa’s declining supply have provided some respite for the precious metal’s price, which has climbed by 10 percent in the past week. It rose $22 to fix at $1 540 an ounce yesterday.
Implats still has a way to go to reassure investors. Apart from labour concerns, it must still finalise the sale of a 31 percent stake in its Zimplats operations to the Zimbabwean government.
Implats share price gained 0.40 percent to R135.60 and Lonmin rose 5.01 percent to R83.80 on the JSE yesterday. - Reuters