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SA seen avoiding another crippling platinum strike

May 20 2016 10:13
Eddie van der Walt, Kevin Crowley and Paul Burkhardt

Johannesburg - At least the world’s biggest platinum producer and the main South African labor union can agree on one thing before wage demands have even been set - any disruption won’t be as painful as last time.

Anglo American Platinum (Amplats) [JSE:AMS] and the Association of Mineworkers and Construction Union, who are preparing for new labour talks before a two-year agreement ends next month, both on Thursday said they don’t expect any major output interruptions. The last accord was signed following a crippling five-month mine strike, the longest in South African history.

What’s so different this time around is the state of the industry. Prices have slumped by a third since that strike ended, forcing mining companies to cut jobs because many operations have become unprofitable. The lower price, as well as the effects of that strike, prompted Impala Platinum Holdings (Implats) [JSE:IMP]and Lonmin [JSE:LON], the next largest producers, to raise funds from shareholders last year. South Africa is the biggest platinum producer.

“This will be a very different wage negotiation round,” Chris Griffith, the chief executive officer of Amplats, as the top miner is known, said in an interview in London. “There have been massive job reductions since then, so I think there is a much greater sense of reality and the expectations are very different.”

Labour union compiling demands

The AMCU, the dominant labour group on South Africa’s platinum belt, also doesn’t anticipate any large disruptions, Manzini Zungu, a spokesperson for the group, said in a text message. It’s in the process of compiling demands, he said on Friday.

During the 2014 strike, platinum prices remained little changed as large stockpiles compensated for production losses. The metal has gained 14% this year to $1 018.95 an ounce, rebounding from the lowest since 2008.

Mine shutdowns and safety stoppages have already hit production this year in South Africa, where almost three quarters of platinum and about 40% of palladium is mined. Global platinum mine production is set to fall 5% in 2016, after reaching a four-year high, research firm Metals Focus said in a report on Monday. Palladium production will fall by a similar amount after jumping to the highest since 2010.

The AMCU in 2013 displaced the National Union of Mineworkers as the largest representative of employees at the biggest platinum producers.

“There is still inter-union rivalry, so that will still play a factor,” Griffith said. “I think we will have a reasonable settlement with limited disruption.”

amcu  |  anglo amercian  |  unions  |  mining  |  wage talks


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