Mining minister says platinum industry 'very close' to strike solution

Paul Burkhardt

The mineral resources minister says parties are close to finding a solution to the platinum mining strike, although critics are skeptical of this.

The stoppage by workers in the country with the biggest reserves of the metal has cost the producers R20.6-billion  in revenue in the industry's longest and costliest strike.(AFP)

The three biggest platinum producers and the main union at their South African operations will consider proposals by the mines minister to end a more than 18-week strike that’s crippled output and shrunk the economy.

Mineral resources minister Ngoako Ramatlhodi last week brokered talks between Anglo American Platinum, Impala Platinum Holdings, Lonmin and the Association of Mineworkers and Construction Union (Amcu) to try end a strike over pay by more than 70 000 employees that started on January 23.

“We are definitely close, very close” to a solution, Ramatlhodi told SABC news on Monday. “We’ll get feedback this afternoon and if it requires more work, we’ll get the job done. We have no time to waste, we can’t afford another day longer.”

The stoppage by workers in the country with the biggest reserves of the metal has cost the producers R20.6-billion  in revenue in the industry’s longest and costliest strike. It has cut mining’s contribution to the economy by the most in 47 years in the first quarter, resulting in the first contraction in gross domestic product since a 2009 recession, Statistics South Africa said last week.

The three producers are considering raising their wage offer, Johannesburg-based Beeld newspaper reported, without saying how it got the information. They may propose to increase monthly wages by R800, or as much as 16% a year until 2017 to end the strike, it said. They’re currently offering raises of as much as 10% annually.

Wage offer
Amcu wants basic monthly pay excluding benefits for entry-level underground employees to be more than doubled to R12 500 by 2017. South African inflation was 6.1% in April.

“The potential for the country to go into recession is a possibility,” said Mark Rosenberg, Africa director at Eurasia Group in New York, said in a May 30 phone interview. “The fact that the GDP number came out is probably the most important driver” in the government’s involvement, he said.

Ramatlhodi was sworn in last week after the nation’s May 7 general election, which was won by the African National Congress party. He put together a team with representatives from the National Treasury and the Labour ministry to resolve the standoff over wages.

Government involvement
“I think it’s great to see this process,” Hanre Rossouw, commodities chief for frontier and emerging markets at Investec Asset Management, said May 30. The government’s preoccupation with the elections limited earlier intervention, he said.

The situation may not be any different for the minister than it was for his predecessor, Susan Shabangu, according to Peter Attard Montalto, an emerging-markets strategist at Nomura International Plc in London.

“I don’t see Ramatlhodi being able to do anything different to Susan if he sticks with the standard tool kit; all he is doing is classic ANC engagement,” he said.

The union asked the nation’s labour court to prevent Anglo American Platinum and Impala from communicating details of the wage offer directly to workers through text message.

The matter was struck off the labour court roll on Monday as the union was unable to prove that the matter was urgent, Amcu lawyer Jayson Kent told reporters in Johannesburg.

The “harm” caused by direct communication “is ongoing,” resulting in union divisions, he said.

The Alternative Information & Development Center, a group providing technical support to Amcu, said the top three producers were selling platinum group metals below market prices, curbing their ability to pay higher wages.

“AIDC is putting findings in the public domain with the intention to engage in a public debate,” Brian Ashley, director of the group, said after a press conference in Johannesburg. – Bloomberg

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