Union Calls Strike by 90,000 South Africa Platinum, Gold Workers

Jan 20, 2014 6:05 am ET

Jan. 20 (Bloomberg) -- The South African union representing most workers at the world’s top three platinum companies and some of the largest gold mines in the nation has served notice that its members will go on strike over wages.

The Association of Mineworkers and Construction Union delivered the notices to Anglo American Platinum Ltd. and Lonmin Plc. today and said it plans the same for Impala Platinum Holdings Ltd. It has at least 70,000 members across the three companies. Gold producers, where the AMCU has about 20,000 members, including at AngloGold Ashanti Ltd., also confirmed through an industry group they’ve been told of the strike.

“Tomorrow, they’re going to be served with the notice, as per the mandate,” Joseph Mathunjwa, president of the Association of Mineworkers and Construction Union, said after addressing thousands of members in Rustenburg, about 120 kilometers (75 miles) northwest of Johannesburg, yesterday.

AMCU workers agreed to start a strike at Amplats, as the world’s largest producer of platinum is known, with a show of raised fists at the meeting in a stadium. The strike will start on the first shift on Jan. 23, Mathunjwa said, referring to Amplats, Impala and Lonmin. The union is the largest at the biggest South African mines run by AngloGold, Sibanye Gold Ltd. and Harmony Gold Mining Co.

“They have been served with a notice by AMCU of its intention to strike at Sibanye Gold’s Driefontein mine, Harmony Gold’s Kusaselethu and Masimong mines, and at AngloGold Ashanti’s South African operations,” the Chamber of Mines said in a statement, referring to its members.

Court Order

Gold companies in South Africa, the sixth-biggest producer of the metal, in September reached a wage accord with labor groups, except for the AMCU. The chamber said today that that wage agreement covered all gold workers and any strike by AMCU would be opposed. It will seek a court order to prevent a walkout by AMCU members, the chamber said.

The union maintains its demand of an entry-level monthly wage of 12,500 rand ($1,150) a month. “We cannot just fold our hands and see this exploitation taking its course, generation to generation,” Mathunjwa told reporters on Jan. 15 in Johannesburg.

The AMCU’s call for a gold strike is a bid to strengthen its position among workers in the industry, where it represents about 20 percent of miners, said Mark Rosenberg, an Africa analyst at New York-based Eurasia Group.

Union’s Goal

“The threat of gold strikes is intended to amplify the union’s leverage and reflects its long-held goal of breaking collective bargaining in that sector,” Rosenberg said in e- mailed comments yesterday. “Unlike in platinum, though, gold producers can challenge the legality of an AMCU strike, which may well push it back until after the platinum strikes begin.”

South Africa accounted for 73 percent of global platinum primary production in 2012, when the industry employed 198,000 people, according to the chamber’s website. Platinum, palladium and rhodium made up 23 percent of the mining exports from the continent’s largest economy that year.

The AMCU, which has more than 60 percent of the workforce at Anglo American Plc unit Amplats, won a renewed mandate to strike at Impala and Lonmin, the second- and third-largest producers, after holding earlier meetings with their membership at the companies. UASA and the National Union of Mineworkers accepted Amplats’ offer to raise wages as much as 8.5 percent, leaving the AMCU holding out for a better deal.

Finance Minister

The spot price of the metal advanced as much as 0.7 percent today to $1,467.49 an ounce, the highest level since Nov. 7. The price has increased more than 6 percent since Dec. 31 amid concerns that a strike in South Africa may constrain supplies.

Finance Minister Pravin Gordhan today urged platinum producers and the union to avert the strike through talks. The two sides must “get around the table,” Gordhan told Johannesburg-based SAfm in an interview from Davos, Switzerland.

Amplats rose 2 percent to 414 rand by 12:17 p.m. in Johannesburg. It dropped as much as 2.3 percent earlier.

The notice indicates a Jan. 23 start of the strike, Mpumi Sithole, a spokeswoman for the company, said by phone. Lonmin also received the notification, Sue Vey, a spokeswoman for the company, said by phone. “As the notice says, talks will continue before the strike starts.”

The NUM accepted a wage deal from Northam Platinum Ltd. on Jan. 17 after a two-month strike at its Zondereinde mine. Its members agreed to increases of as much as 9.5 percent and a bonus in monthly installments.

“The target has now been set and AMCU will push Amplats, Impala and Lonmin to better it,” Michael Kavanagh, a Noah Capital Markets analyst in Cape Town, said in a Jan. 17 e-mail.

--With assistance from Kevin Crowley in Johannesburg. Editors: John Viljoen, Tony Barrett