‘Platinum miners should accept pay offer’

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AngloPlatStrike Reuters.

Johannesburg - The Association of Mineworkers and Construction Union should accept South African platinum producers’ latest pay offer to end a three-month strike, said analysts at JPMorgan Cazenove and Investec Asset Management.

“It is on the limit of what is affordable at the affected mines and therefore, logically speaking, it should be” taken, analysts Steve Shepherd, Allan Cooke and Abhishek Tiwari, wrote in a note to clients yesterday.

“But it remains a long way away from the Amcu’s demands.”

Anglo American Platinum, Impala Platinum and Lonmin, the three biggest producers, 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 basic pay excluding bonuses of 12,500 rand within four years.

South Africa’s inflation rate is 6 percent.

“We would need to see uncharacteristic compromise on Amcu’s part if the offer is accepted,” the analysts wrote.

Workers must be retrained and safety measures taken after a mine has been shut.

“Even if a decision to return to work was taken tomorrow, we’d be very surprised to see ‘normal’ production restored before July.”

Platinum prices have dropped 3.8 percent to $1,402.38 an ounce since the strike started January 23.

“We believe that fabrication demand is strong and growing and that supplies have not really been affected by the strike yet, thus the price strength that many have anticipated is still ahead of us,” they wrote, referring to platinum group metals.

“Prices could move higher very soon.” - Bloomberg News

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