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Relief as last of SA mine strikes ends

Nov 15 2012 11:26 Reuters

Striking Amplats mineworkers. Picture: Lucky Nxumalo/City Press

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Johannesburg - The last of a wave of illegal strikes that have swept South Africa's mining sector ended on Thursday after workers accepted an offer from Anglo Platinum [JSE:AMS] (Amplats), the world's top producer of the precious metal.

South Africa's platinum and gold sectors have been rocked for months by often violent wildcat action, spawned by income disparities and a union turf war for members, and more conflict could be sparked by looming job cuts and wage talks next year.

The labour unrest has rattled investors and has claimed the lives of over 50 people, including 34 shot dead by police in one incident in mid-August near a mine operated by platinum producer Lonmin [JSE:LON].

"All the workers are returning to work," said Evans Ramokga, a strike leader at Amplats, a unit of troubled global mining group Anglo American [JSE:AGL], which has struggled for two months to get more than 30 000 employees back to work at several of its South African mines.

The company has offered either an additional monthly allowance of R600 or a monthly salary increase of R400, as well as a one-off R4 500.

Amplats has said the strikes would cut annual profit by more than a fifth and tensions in the sector remain, with 37 workers scheduled to appear in court on Thursday after being arrested for violence during protests near a chrome mine run by Xstrata.

South Africa's boardrooms and politicians may breathe a sigh of relief as the worst labour unrest since the end of apartheid in 1994 winds down, but uncertainties still cloud the picture.

The dominant National Union of Mineworkers, which has delivered above-inflation wage hikes but contained militancy, has lost control over much of its rank and file, a source of concern to the ruling African National Congress and corporate bosses alike.

Social tensions

Anglo American, which this week raised cost estimates for its Minas-Rio project in Brazil and warned of lower profit from its South African iron ore unit Kumba [JSE:KIO], is scrutinising Amplats in a review widely expected to lead to shaft closures and job cuts that could further stoke social tensions.

Much of the platinum sector is battling with low demand, though the price for the metal used for emissions-capping catalytic converters in cars has risen 13% this year mostly because of supply concerns stemming from the strikes in South Africa, home to 80% of known reserves.

Refiner Johnson Matthey said on Tuesday global platinum supply will hit an 11-year low in 2012, largely because of the strikes' impact on production, and said demand would outstrip available stocks.

A Reuters journalist said workers at Amplats' Thembelani shaft had reported for work on Thursday morning.

"We are reporting to work as a sign of goodwill while the striking committee meet management (to finalise the deal)," said Thebe Maswabi, a miner at the shaft.

Amplats spokesperson Mpumi Sithole said management and labour leaders were scheduled to meet on Thursday morning.

Among other pledges, Amplats has said it would start wage talks ahead of the expiry of current deals next year.

Bringing the wage talks forward is seen as a way to head off possible strike action, but is a risky course as the negotiations could also provoke another round of wildcat action by militant labour leaders.

Around 80 000 South African miners or 15% of the workforce had been off the job at one point, but all of the major strikes are now over.

AngloGold Ashanti [JSE:ANG], the world's third-largest bullion producer, said on Wednesday its Mponeng mine had resumed work, ending an eight-day stoppage. All of the company's South African operations are now back up and running.

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