Picture: Timothy Bernard.
Picture: Timothy Bernard.

Mining strike is like no other since 1987

By Reuters Time of article published Mar 19, 2014

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Johannesburg - With no end in sight, the platinum belt strike is set to become the biggest single stoppage to hit the mining sector since 1994, and now threatens the viability of an industry already in deep trouble.

Revenue and production losses look sure to top those experienced in 2012, when a wave of rolling, wildcat strikes pushed Anglo American Platinum (Amplats) into the red and forced Lonmin into a rights issue to shore up its finances.

Shareholders are concerned at the prospect of steeper losses this time, with almost half the shafts already unprofitable.

Already in its eighth week, the wage strike by the Association of Mineworkers and Construction Union (Amcu) against Amplats, Impala Platinum (Implats) and Lonmin is likely to drag on for several weeks, with both sides poles apart and neither blinking.

As costs mount, the sheer scale of the strike is also an unwelcome development for President Jacob Zuma and the ANC, ahead of the general election on May 7.

The strike has so far taken about 440 000 ounces of platinum out of production, as 44 working days have been lost and the daily losses are almost 10 000 ounces.

Amplats, Implats and Lonmin collectively lost about 544 000 ounces to the wildcat strikes in 2012, according to estimates and data provided on Monday by the companies.

But there was no single stoppage in that year. The three biggest platinum producers were hit at different times, in periodic eruptions.

The current strike will pass the 544 000 ounce mark if it continues for another 11 working days. The companies have lost more than R8.8 billion in revenue so far, according to a website provided by the Chamber of Mines, which constantly tallies the losses.

In 2012, revenue losses reached about R10.5bn.

So at the current rate of losses – roughly R200 million each working day – the strike will top the one in 2012 for lost revenue in nine working days. It is certain to cause boardroom alarm.

The social and political consequences are also mounting.

According to the industry, employees’ lost earnings stand at almost R4bn – and counting. This means the household incomes of tens of thousands of mineworkers, who have already missed their February pay cheque and will soon miss their one for March, are being sorely stretched.

The ANC already has trouble in the platinum belt – and by extension areas such as the rural Eastern Cape, where many platinum miners are from – with the government held accountable for the police killing of 34 strikers at Lonmin’s Marikana mine in 2012.

Talks between Amcu and the employers collapsed almost two weeks ago. With no resumption scheduled, losses are just going to mount.

Amcu’s chief negotiator, Jimmy Gama, said the union would reiterate its demands to Amplats yesterday.

“The employers have to come to their senses and listen to the demands of the workers,” he said, adding there were no plans at the moment for a resumption of negotiations.

Early this month Amcu softened its stance for the first time, saying it would settle for staggered increases to bring the basic entry wage to R12 500 a month in four years’ time, more than double current minimum wage levels. When the strike began, Amcu wanted the basic wage increased to R12 500 immediately.

The companies are sticking to their latest offer of a rise of up to 9 percent a year for three years on the grounds that they cannot afford any more. – Ed Stoddard and Zandi Shabalala from Reuters

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