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27 Aug 2009 12:25
South Africa’s Impala Platinum said on Thursday it could sack thousands of striking workers, escalating a wage dispute that miners threatened to spread to all the company’s operations.
Impala Platinum (Implats), the world’s No. 2 platinum miner, said it could not bow to union demands for a 14% pay rise after reporting that earnings had halved in the year to June and production costs had risen about 10% an ounce.
South Africa produces four fifths of the world’s platinum and Implats alone supplies 25% of the precious metal, mainly from its South African operations and mines in Zimbabwe.
The strike at Implats threatens to hurt investor confidence in a sector hard hit by the financial crisis, but has so far had little effect on the price of the metal used in jewellery and in catalytic converters to cut pollutants from car exhausts.
Platinum was unchanged from its close of $1,232.
Analysts said the strike had failed to affect platinum prices because demand for cars was depressed.
A strike would have to be wider and much more sustained to have an impact.
Chief Executive David Brown said Implats could not continue to lose production and cash indefinitely, and urged the workers to accept the company’s latest pay offer.
“You have to draw a line in the sand,” he said.
“The strike is reducing output, and cash flow and it puts pressure on the company.
Brown said Implats could not sustain a prolonged strike because it had little inventory of mined ore, and it was costing Implats 3 500 ounces of platinum daily.
Strike could spread
Brown said the strike was so far still confined to its Rustenburg mine—the company’s biggest—where more than 20 000 workers went on strike on Monday night, but added that labour relations at Implats were delicate and it was possible the union could carry out a threat of a company-wide strike.
The pay talks broke down after the NUM—the country’s biggest union—demanded an increase of 14%, having rejected the company’s offer of 10%.
Brown said the NUM’s demand was not negotiable, citing South African inflation at 6,7%.
Above-inflation pay settlements after strikes in other industries and sectors in South Africa, and threats of more stoppages, have added to concerns of inflation pressures.
Analysts said pay settlements above inflation in various sectors have led to worries that it could make it harder for companies to lift Africa’s biggest economy out of its first recession in 17 years.
Impala said on Thursday its headline earnings per share—the key gauge of profit in South Africa—fell 52% in the year ending June 30, mainly hit by weak metal prices in a global recession due to falling demand for cars.
“The possibility of the strike action spreading to all of the company’s operations over the next few days is great, an injury to one is an injury to all,” Lesiba Seshoka, the spokesperson for the National Union of Mineworkers (NUM) said.
The threat of a sector-wide strike appeared to recede after the NUM said workers at Anglo American Plc’s unit Anglo Platinum , the world’s largest producer of the metal, were likely to accept the group’s latest pay deal.—Reuters
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