Implats: Violent strikes could spread

Aug 23 2012 12:05

Company Data

Lonmin plc [JSE:LON]

Last traded 14
Change 0
% Change 2
Cumulative volume 106227
Market cap 0

Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA


Last traded 38
Change 0
% Change 1
Cumulative volume 1769413
Market cap 0

Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

Related Articles

Implats knocked by strike costs

Implats halts output to mourn miners

Lonmin: Minister soothes foreign fears

Toe the line or else, Zuma warns mining firms

Company: Lonmin talks 'cordial'

Labour minister meets with Amcu


Johannesburg - World No.2 platinum producer Impala Platinum Holdings [JSE:IMP] has warned that industrial action at South Africa's platinum mines, resulting in the death of workers at Implats and its rival Lonmin [JSE:LON], could become more widespread.

A violent six-week strike at Implats' Rustenburg operations early this year sliced 21% off its full-year production and, combined with declining metals prices, led to a drastic cut in its dividend, to 60 cents a share from 570 cents last year.

“The platinum industry is experiencing increased levels of industrial action, as witnessed at both Impala Rustenburg at the beginning of this year and more recently at Lonmin, with the associated tragic loss of life. These developments pose a significant risk to the industry,” said Implats’ newly installed chief executive Terence Goodlace.

Describing the labour relations at Implats’ operations as “relatively stable”, Goodlace said the trade union rivalry that sparked the strike at both its operations and Lonmin’s was still “fairly volatile”.

A bitter turf war between the entrenched majority National Union of Mineworkers (Num) and rival Association of Mineworkers and Construction Union (Amcu) has already spilled over to surrounding mines in the Rustenburg area and analysts are worried about a contagion hitting gold producers.

The platinum price has also jumped to a three-month high on the threat that South Africa, as supplier of 80% of the world’s platinum, could be disrupted indefinitely.

Three lives were claimed during the strike at Implats in January and February. This cost the company, which produces 30% of the world’s platinum, 120,000 ounces in lost production and translated into R2.8bn in lost revenue.

Challenges mount

“We are trying to restore production levels. We were hurt by the strike, and the build-up thus far to pre-strike levels has been a lot slower than anticipated,” Goodlace said.

Production for the 2012 financial year came in at 1.45 million ounces and Implats is now unlikely to hit its 2014 target of 2 million ounces.

South Africa’s platinum industry is struggling to survive as input costs, such as electricity and labour, climb and the platinum price falls.

The flaring labour unrest and concerns over South Africa's declining supply has provided some respite for the metal’s price, which has climbed by about $150 in the past week.

Implats still has a way to go to reassure investors. Apart from labour concerns, it must still finalise the sale of a 31% stake in its Zimplats operations to the Zimbabwean government.

Chief financial officer Brenda Berlin told a media conference call that discussions were centred on the value and funding of the stake. She said that other buyers would be engaged only if the funding was not secured by the Zimbabwean government.

* Follow Fin24 on Facebook, Twitter and Google+.




Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Comments have been closed for this article.

Company Snapshot

We're Talking About...

Savings Month

It's never too late to start saving. Visit our special issue and add your voice.

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

The proposal to nationalise SARB will

Previous results · Suggest a vote