Johannesburg - The Association of Mineworkers and Construction Union (Amcu) should accept South African platinum producers’ latest pay offer to end a three-month strike, analysts at JPMorgan Cazenove and Investec Asset Management said yesterday.
“It is on the limit of what is affordable at the affected mines; logically speaking, it should be” taken, analysts Steven Shepherd, Allan Cooke and Abhishek Tiwari, wrote in a note to clients yesterday. “But it remains a long way away from Amcu’s demands.”
Anglo American Platinum (Amplats), Impala Platinum and Lonmin, the three biggest producers, proposed last week to raise the cash portion of wages, including bonuses and living out allowances, to R12 500 a month by 2017, or as much as 10 percent annually, from 9 percent previously. That is short of the union demand for basic pay, excluding bonuses, of R12 500 within four years. The consumer 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 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 on 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.”
Talks to end the protracted wage strike continued behind closed doors at an undisclosed location in Johannesburg yesterday. By early afternoon, there was no indication of how the talks were proceeding.
“There is no final offer as yet, parties are still talking,” Amcu chief negotiator Jimmy Gama said in a text message earlier.
Amcu was meeting platinum mining companies in a bid to resolve the wage dispute, now in its third month.
Amplats shares fell 0.39 percent to close at R508 yesterday; Impala shares dipped 2.54 percent to close at R120.26 and Lonmin shares rose 0.50 percent to close at R52.01. – Bloomberg