Picture: Timothy Bernard.
Picture: Timothy Bernard.

Platinum stocks dwindle as strikers dig in

Time of article published Mar 3, 2014

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Johannesburg - Platinum stockpiles built to weather a strike at the world’s three largest producers of the metal may run out if a new round of talks to end a six-week pay strike at South African mines ends in deadlock.

Anglo American Platinum, Impala Platinum and Lonmin are today meeting with the Association of Mineworkers and Construction Union after first-round talks failed to end a stoppage over pay by more than 70,000 workers that started on January 23.

Producers have so far lost more than 6.6 billion rand in revenue because of the walkout, while wages forfeited exceed 2.9 billion rand, a joint website of the three companies showed today.

“The strikes are going on longer than planned,” Stephen Meintjes, head of research at Imara SP Reid (Pty) Ltd. in Johannesburg, said by phone.

“People might have underestimated the mineworkers’ resolve.”

The Amcu’s members are striking for monthly wages to be more than doubled to 12,500 rand and rejected a mediated increased offer of as much as 9 percent, refusing to budge on their demands.

South Africa’s inflation rate was 5.8 percent in January.

The country accounts for more than 70 percent of production of platinum, a metal used for jewellry and catalytic converters that reduce harmful emissions from vehicles.

Impala, the world’s second-largest producer, can only guarantee deliveries to offshore customers until the end of March, Marketing Executive Derek Engelbrecht told reporters on February 27.


Positions Hardening


The current round of talks will be “critical” in resolving the impasse, Johan Theron, a spokesman for Johannesburg-based Impala, said today by phone.

“The losses could be so big for both parties that you could easily see a hardening of positions if you miss one another again,” Theron said.

Anglo Platinum, which is the largest producer and is also known as Amplats, was able to fulfill customers’ orders for six to eight weeks, the company said in January.

Lonmin stockpiled 42,000 ounces of unrefined metal in the year through September and also had 13,000 ounces of unsold refined platinum, it said in November.

Lonmin declined to comment on guarantees for platinum deliveries when contacted by phone.

Amplats wasn’t immediately available to comment.

“We’re not that far away” from producers reaching the end of their stockpiles, Justin Froneman, a Johannesburg-based equity analyst at SBG Securities Ltd., said by phone.

“That’s when you’re going to start to see a real reaction from the market.”


Share Movements


Amplats lost 2 percent to 450.15 rand by 1:01 p.m. in Johannesburg, paring the gain since the strike started to 4.2 percent.

Impala was little changed at 114.09 rand, having lost 9.4 percent since January 23, while Lonmin dropped 3.1 percent to 292 pence in London, taking the drop since the start of the walkout to 9 percent.

Investors haven’t yet priced in the effect of the strike on companies’ earnings, Froneman said.

“There is more positive sentiment around the companies doing what is right and sticking together,” he said, referring to the producers’ agreement to negotiate as a unit.

“If someone does break rank, I think you’re going to find the dynamic changing very quickly.”

The Amcu hasn’t moved during talks “as per the spirit of negotiations,” Mines Minister Susan Shabangu said yesterday at a mining conference in Toronto.


Position Stuck


“That union is not moving an inch, it’s stuck in one position,” Shabangu said.

“My understanding is that if that happens, within the labor relations law that’s an unfair labor practice.”

Amplats and the Amcu are due to meet in a Johannesburg court on March 5 after the company asked that the union’s leaders be held in contempt of an order obliging them to prevent violence during the strike.

All three affected producers earlier obtained court permits compelling the Amcu to keep to picketing rules.

An Amcu official was killed in clashes with police and two others were arrested for the attempted murder of an Amplats worker last month.

A winch operator on his way to the company’s Union mine was attacked today, according to a statement by the National Union of Mineworkers.

While dissent within the Amcu has also emerged, the size of the factions hasn’t been established.

The Workers Committee, an unstructured group claiming members at Impala and Amplats, said that labor wasn’t unified for a strike.

“The time, it was not the right time, because we can’t have workers out while the union was in pieces,” Gaddafi Mdoda, a former Amcu member, told reporters February 28 in Johannesburg.

The Workers Committee had no proof of membership and didn’t have recognition agreements with employers, Amcu President Joseph Mathunjwa said by phone. - Bloomberg News

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