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Mines seek deal with striking workers

Johannesburg - Major platinum producers in South Africa said on Thursday they would take their latest wage offer directly to employees, after they failed to reach a deal to end a 13-week strike with the Association of Mineworkers and Construction Union (Amcu).

The move marks a dramatic turn of events in longest and most damaging strike in South Africa's mines in living memory, setting the next stage in a grinding war of attrition between capital and labour on the platinum belt.

"(We) advise that, unfortunately, no resolution has yet been achieved in resolving the three-month strike relating to wages and benefit," Anglo Platinum (Amplats) [JSE:AMS], Impala Platinum (Implats) [JSE:IMP] and Lonmin [JSE:LON] said in a joint statement.

"The producers have a duty to provide the details of the settlement offer to our employees and will do so forthwith."

Amcu officials were not immediately available for comment and the union's president Joseph Mathunjwa was tight-lipped earlier when he left the talks at Lonmin's Johannesburg offices.

The companies can go directly to the workers through a number of avenues including by mobile phone text messages, a method they have been using to communicate with them throughout the strike.

"They will get the offer detail from us. They will be able to consider the offer and indicate to their union whether they are happy to return or not," Implats spokesperson Johan Theron told Reuters.

"Failing the above, they will be able to tell us whether they are ready to accept or not. On this basis we could then take a decision to re-open the mine and allow workers to return on the basis that they enter into an individual agreement with the employer," he said.

The union and producers had spent the past three days haggling over an offer tabled last week by the companies.

Underscoring the widening impact of the stoppage, Amplats said it now expected full-year production to be 2.1 million ounces, down from its previous estimate of 2.3 to 2.4 million.

There is "potential for further downside revisions from the ongoing industrial action", the unit of global mining house Anglo American said in a trading update.

A painful restructuring is considered likely after the dust clears from the strike, with job losses expected, especially around Amplats' struggling Rustenburg operations, which it has signalled it could sell or mothball.

The strike, which started exactly 13 weeks ago, has hit about 40% of global production with more than 700 000 ounces lost so far.

Million-ounce strike

Even if the strike were to end next week, production losses will still mount as the mines slowly reboot.

"Based on the extent of direct losses from strike action to-date, and adding in an allowance for lower production as a result of safe-start procedures, re-hiring, re-training and ramp-ups, I expect losses to platinum production this year to be in the order of 900 000 to 1 million ounces," said William Tankard, metals analyst at Thomson Reuters GFMS.

Exacerbating the industry's woes is the muted price reaction to the stoppage despite its scale. Traders have bet there are adequate above-ground stocks and demand remains far from robust in major markets such as Europe.

Spot platinum prices are just under $1 400 an ounce, around 3.5% lower than just before the walkout began on January 23.

The sector's viability is also being shaken. Producers have lost R14.5bn ($1.4bn) to the strike so far, according to an industry website that gives a running tally.

These factors plus rising costs explain why the producers have been trying to draw a line in the sand, setting the stage for a protracted showdown.

Mathunjwa, Amcu's uncompromising president, has cast the strike in class-war terms and says his union aims to rectify decades of exploitation of black labour by white capital.

Initially demanding an immediate doubling of the basic wage - net salary before allowances such as housing - for entry-level workers to R12 500 a month, Amcu has since said it would accept annual increases that would reach this goal in three or even four years' time.

The producers' latest offer, made last Thursday, was for wage rises of up to 10% and other increases that would take the minimum pay package - the basic wage including the allowances - to R12 500 a month by July 2017.

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