Johannesburg - Northam Platinum Ltd., owner of the world’s deepest mine for the metal, may be forced to cut jobs after losing more than 200 million rand ($20 million) during a three-week strike over pay, it said in a letter to workers.
Northam is losing 14 million rand a day in revenue, excluding costs, as a result of the strike at its Zondereinde division that began November 3, it said in an open letter to the National Union of Mineworkers, published today in Business Day.
The company has offered workers pay increases of 8 percent to 9 percent, it said.
“Northam itself is in a tenuous position,” Chief executive Glyn Lewis and General manager Danny Gonsalves said in the letter.
“A higher cost base would reduce the company’s profitability, which is already strained by weak economic fundamentals, and will -- ultimately -- affect jobs.”
The NUM, which represents about 80 percent of employees in two bargaining unit categories, has demanded an average pay increase of 61 percent.
The outcome of the Northam strike will set a precedent for wage negotiations at larger producers Anglo American Platinum Ltd., Impala Platinum Holdings Ltd. and Lonmin Plc, according to Investec Plc and Stanlib Asset Management.
Northam is aiming not to cut jobs as part of a settlement, it said.
“Unlike other miners, Northam has not yet retrenched employees as a means of containing costs and we would hope to continue on that track,” it said in the letter, addressed to NUM General Secretary Frans Baleni.
‘Insincere Gesture’
The letter is an insincere gesture because the first time he read it was in the newspaper, Baleni said in an interview.
“They plead poverty, but executives continue to earn huge salaries,” he said.
“Only one side must tighten their belts and that’s the workers.”
The strike will continue and about 5,000 miners will march to Northam’s offices in Johannesburg tomorrow, Baleni said.
The impact of the strike on the workforce and communities “is likely to be significant,” Northam said, as striking workers have so far lost 30 million rand in wages.
Employees who strike do not get paid in South Africa.
With each worker supporting between five and 10 people, about 70,000 people are potentially without income, Northam said.
The company has revised its wage proposal three times and is offering to pay entry-level employees between 10,200 rand and 10,600 rand a month, excluding bonuses and allowances.
Platinum dropped 0.5 percent to $1,378.99 an ounce at 8:15 a.m. in Johannesburg, 28 percent lower than the high of $1,903.50 an ounce in August 2011.
Increased production from lower-cost countries such as Zimbabwe and higher recycling rates means South African producers have a “dwindling influence” on the metal’s price, Northam said. - Bloomberg News