Platinum mines brace for Amcu strike

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Amcu Independent Newspapers. Association of mineworkers and construction union (AMCU) president Joseph Mathunjwa. Picture: Tiro Ramatlhatse.

Johannesburg - The world’s largest platinum miners are bracing for the most severe labour turmoil since 44 people died during a strike at Lonmin in August 2012.

About 70,000 members of the Association of Mineworkers and Construction Union plan to walk out over pay on January 23 at mines in South Africa’s platinum belt run by Anglo American Platinum, Impala Platinum and Lonmin.

The area accounts for about 70 percent of global output of the precious metal, whose price advanced to the highest level in more than two months today amid concern a strike will hobble supplies.

The deadly clash 17 months ago at Lonmin’s Marikana mine came after workers declared “Enough is enough,” AMCU President Joseph Mathunjwa said last week as he addressed thousands of his members.

“We also want the wealth, we want to support and raise our children.”

Speaking at the Wonderkop stadium about 100 kilometres (62 miles) northwest of Johannesburg and near where police killed 34 Marikana workers in a single day on August 16, 2012, Mathunjwa told members: “We are here reminding the employer that their blood was not shed for nothing.”

Producers have been preparing for months for a strike, building up weeks of supplies of the metal to ship to customers if their shafts are halted.

While the AMCU has spent the past days renewing a mandate from members before their end-of-year break for a paralysing strike, the companies have said they are open to last-minute talks to try and avert a walkout.

 

Strike Vote

 

Thousands of AMCU members at Anglo American Platinum, or Amplats, yesterday voted in a show of hands at a mass meeting near the town of Rustenburg to go on strike.

The union will serve strike notices at Johannesburg-based Amplats, the world’s biggest producer, Impala and Lonmin today, Mathunjwa said.

The AMCU is also calling its members at South African gold mines out on strike this week over pay.

The AMCU emerged as an alternative force among South African mineworkers during a strike at Impala in early 2012, growing to displace the National Union of Mineworkers as the largest among platinum employees.

Staging a walkout at mines now gives the union an opportunity to assert its authority as it seeks to fend off competition for numbers from the rival NUM and the National Union of Metalworkers of South Africa.

“AMCU needs to take bold action to consolidate its power in the platinum belt,” Mark Rosenberg, an Africa analyst at New York-based Eurasia Group, said in e-mailed comments yesterday.

“As we anticipated, the timing was not right before the holidays, but now it is do-or-die time for union leadership, particularly with the prospect of further competition for members from NUMSA.”

 

Pay Offers

 

Mathunjwa’s union is demanding that the basic monthly pay for some workers be more than doubled to 12,500 rand ($1,149).

The lowest-paid underground workers currently get about 5,500 rand, excluding some benefits.

Amplats, where the AMCU represents 60 percent of workers, Impala and Lonmin have made wage-increase offers of as much as 8.5 percent of basic pay, 3.2 percentage points more than the inflation rate of 5.3 percent in Africa’s largest economy.

All three companies have in the last 15 months either turned to investors for funds, set plans to shut mines or cut output.

Platinum producers are scaling back on capital spending as they confront a slump in the price of platinum, which is down 17 percent from its highest point in 2013.

The three were disrupted by strikes that lasted six weeks or longer in 2012, collectively losing in excess of 480,000 ounces of production.

 

Difficult Position

 

“All of them are in a very difficult position cost wise,” Neill Young, an analyst at Cape Town-based Coronation Asset Management, said by phone on January 15.

“They need to control the cost base and they need to take a firm stand on the wage bill, which is 50 percent, 60 percent of their businesses.”

The spot price of platinum, used in jewellry and catalytic converters that reduce harmful emissions from passenger cars, has climbed 6.5 percent since December 31.

It rose as much as 0.5 percent to $1,461.75 an ounce today, the highest level since November 7, and traded at $1,460 at 7:23 a.m. in Singapore.

Northam Platinum Ltd., a smaller producer, late last week settled with the NUM for wage increases of up to 9.5 percent in addition to a continuing monthly bonus of 125 rand to end a strike that lasted more than two months.

The company offered an 8 percent increase for the lowest paid workers before the strike began on November 2.

 

Bar Set

 

The AMCU won’t want to settle for a smaller increase at the big three producers than the deal achieved by the rival NUM, said Hanre Rossouw, head of commodities for frontier and emerging markets at Investec Asset Management, which owns Amplats, Impala and Lonmin shares.

“The bar is set at double-digit levels,” Rossouw said from Cape Town on January 17.

“AMCU is not going to settle for less than that. It sets the scene for a big stand-off.”

Even so, platinum producers are “much better prepared” than in previous years, he said.

“There’s better coordination between the chief executives and the companies have been building stockpiles.”

Amplats intends to meet the AMCU for further talks, Mpumi Sithole, a spokeswoman for the Anglo American Plc unit, said by phone on January 17.

“It’s within AMCU’s right to call a strike, but we hope they first give us opportunity to negotiate further,” Johan Theron, a spokesman for Johannesburg-based Impala, said by phone on January 16.

Lonmin spokeswoman Sue Vey declined to comment when contacted by phone on January 17.

The AMCU won’t settle for less than a basic monthly wage of 12,500 rand, Mathunjwa told the union’s Lonmin members.

“Do you remember how the government answered our cries with bullets?” Mathunjwa said when he spoke at the stadium near Marikana.

“Many men were killed on that hill. Their blood, our brothers’ blood wasn’t spilled for nothing.” - Bloomberg News



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