Platinum producers bite bullet and hold onComment on this story
Platinum’s three biggest producers are accepting crippling output disruptions and lost sales from the 27-day strike in the sector rather than yielding to union demands and higher wage costs, according to Stanlib Asset Management.
Keeping expenses under control was more important than reviving production by giving up ground on a wage settlement, Kobus Nell, an analyst at Stanlib, said yesterday.
“This is short-term pain. Should this pain bring about more viable and solid businesses, it will be better for everyone,” he said.
The three producers are Anglo American Platinum (Amplats), Impala Platinum (Implats) and Lonmin.
Amplats had lost more than 60 000 ounces valued at R1.5 billion in the first three weeks of the strike, chief executive Chris Griffith said on Friday.
The Association of Mineworkers and Construction Union (Amcu) wants monthly wages for entry-level workers to be more than doubled to R12 500. The union attended the Commission for Conciliation, Arbitration and Mediation yesterday for the first time since it rejected the employers’ pay increase offer of up to 9 percent.
Strike-disrupted mines run by Amplats near Rustenburg were unlikely to be part of the company’s core operations in future, Business Day reported yesterday, citing Mark Cutifani, the chief executive of parent Anglo American.
“Those assets that are highly labour intensive, where we are very exposed to the sort of things happening at the moment, are the assets that we are going to have to be very careful with,” he was quoted as saying.
Amplats was suing Amcu for R591 million, claiming compensation for damage to property, increased security costs and production losses caused by non-striking employees being prevented from going to work, company spokeswoman Mpumi Sithole said on Friday.
Some roads leading to Amplats mines were blocked yesterday, making it difficult for non-striking employees to report for work, Sithole said. Incidents of violence had subsided since an Amcu official was killed in a clash with police on February 7, she said.
The situation around Lonmin’s mines was calm, spokeswoman Sue Vey said. The company won a court order on Friday compelling Amcu to keep to picketing rules.
Implats was preparing for the strike to last until May, company spokesman Johan Theron said on Friday.
Amplats closed unchanged at R462 yesterday. It has gained 13.8 percent since January 17, the last day before Amcu gave notice of its strike. Implats fell 45c to R123.45, but was still up 2.82 percent since January 17, and Lonmin lost 0.52 percent to R58.90, for a gain of 4.6 percent in the period. - Bloomberg