Platinum miners face fight over jobs

Picture: Timothy Bernard.

Picture: Timothy Bernard.

Published Jun 13, 2014

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Johannesburg - The union whose strike has paralysed the biggest platinum mines has accepted -- with conditions -- plans to end the deadlock.

After resolving a 20 week-conflict over pay, its members may next face a battle to keep their jobs.

Anglo American Platinum, Impala Platinum and Lonmin, the world’s three largest producers, will react by reorganising operations once the standoff with 70,000 workers is broken, analysts and investors said.

The companies said they expect a formal response from the Association of Mineworkers and Construction Union to their pay proposal today.

The South African mines “will concentrate on getting to steady-state production first of all, but they’ll be looking to cut costs where they can” after the strike, Esther Krukowski, who helps manage $64 billion at BlueBay Asset Management in London, including Impala bonds, said by phone.

The three companies say they have lost 22.9 billion rand in revenue since the strike started January 23 and that employees have forfeited 9.9 billion rand in wages.

The deadlock in the country that accounts for about 70 percent of platinum mined globally pushed its economy into contraction in the first three months of 2014.

The conditional acceptance by workers of the pay proposals could be the biggest breakthrough in a standoff that is 10 days short of lasting five months.

Joseph Mathunjwa, the Amcu’s president, yesterday consulted members at the Rustenburg-based operations of Anglo American Platinum, known as Amplats, Impala and Lonmin northwest of Johannesburg.

The union will today meet workers at the Amplats mines near Thabazimbi in Limpopo province, Mathunjwa said by phone.

 

Agreement ‘Close’

 

“In my opinion, we are close to one another,” Mathunjwa said.

“That is the case for all three mines.”

Prospects for an end to the stoppage sent prices of the metals extracted from the mines tumbling.

After falling 2.6 percent yesterday, platinum for immediate delivery was little changed at $1,452.24 an ounce by 8:56 a.m. in Johannesburg.

Palladium reversed some of yesterday’s losses of 4.6 percent, gaining 0.8 percent to $828.25 an ounce.

Lonmin rose 0.5 percent in London trading, extending yesterday’s increase of 8.9 percent.

Impala rose 0.4 percent in Johannesburg, while Amplats advanced 2 percent.

While the companies said they would elaborate on their proposal once the union had responded, details emerged at the Amcu mass meeting at Impala.

The lowest-paid workers are in line for increases of about 18 percent in their basic pay.

 

Holiday Allowances

 

Impala proposes improving the 5,500 rand basic monthly wages of the lowest-paid by 1,000 rand in the first and second years of a pay agreement, Amcu Treasurer Jimmy Gama told workers, reading out a letter from the company.

That compares with a previous Impala plan to raise pay by 580 rand in year one and 680 rand in year two.

Impala, which operates the world’s largest platinum mine, also proposed an increase of 950 rand a month in years three to five of the plan, compared with 750 rand in year three, 840 rand in year four, and the 900 rand in year five put forward previously, he said.

Impala’s living-out allowances will remain at their 2013 levels, while pension-fund contributions, overtime, holiday and shift allowances will be adjusted to keep up with inflation.

While workers’ acceptance of the proposal is “a breakthrough,” their backing is conditional, Mathunjwa said at a rally attended by Impala miners.

Members have requirements on issues including back pay, living-out allowances and the reinstatement of jobs, Mathunjwa said.

 

Discontent Voiced

 

Acceptance of the proposals wasn’t unanimous.

Some of the thousands of workers who gathered at a stadium at Lonmin’s operations left the meeting before it ended.

Members of the crowd that gathered at an Impala shaft voiced disapproval during a discussion of some of the terms by union officials.

The three companies said yesterday that they had reached “in principle” agreement with union leaders.

“We’ve made such a lot of progress over the past 24 hours, it will be difficult to believe we’ll stumble over the last hurdle,” Johan Theron, a spokesman for Impala, said today by phone.

The companies are hoping to meet the Amcu for further talks today and will continue contact with the union over the weekend if needed, Theron said.

July 1 is the earliest Lonmin expects to be able to restart mining, Sue Vey, a spokeswoman said.

“Our thinking is that in the next week people will return, then giving it another week or two for medical and nutrition.”

 

Mechanised Mines

 

The agreement comes two days after Minister of Mineral Resources Ngoako Ramatlhodi warned of job losses should the strike continue.

“Everyone shouldn’t be jumping for joy quite yet,” said Ben Davis, a London-based analyst at Liberum Capital.

“The industry still has to restructure.”

Amplats already has plans to increase production at Mechanised, open-pit mines in a switch from labour-intensive underground excavation.

Chief executive Chris Griffith said in March he’s willing to shut shafts to prevent the company losing money.

Lonmin said last month jobs are at risk because of the strike.

The companies are unlikely to cut jobs straight away, said Des Kilalea, a London-based analyst at RBC Capital Markets.

“You can’t do that -- it will just cause another strike. But you can’t get away from it, there has to be a new structure.” - Bloomberg News

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