Platinum Strike Talks Suspended After Failure to Reach Deal

Feb 06, 2014 8:40 am ET

(Updates with platinum price in final paragraph.)

Feb. 6 (Bloomberg) -- Talks to try to end a two-week strike at the world’s three largest platinum producers were suspended after they failed to reach agreement with a South African union.

Anglo American Platinum Ltd., Impala Platinum Holdings Ltd. and Lonmin Plc, who lost about $180 million in sales since the wage strike began Jan. 23, say the Commission for Conciliation, Mediation and Arbitration hasn’t specified a date to resume.

“We cannot say that everything has collapsed,” Association of Mineworkers and Construction Union President Joseph Mathunjwa said today by phone. “The employers didn’t want to accept the proposal of CCMA, which was disappointing.”

The union has more than 70,000 members on strike in support of demands including a doubling of monthly basic pay to more than 12,500 rand ($1,126). The companies say about 45 percent of local producers fail to break even and a long strike will worsen losses. The cost to the nation is about $360 million, they said, while miners have lost pay and benefits of about $80 million.

“Acceding to AMCU’s demands, which have not shifted since negotiations began, is simply not feasible and would effectively mean a doubling of the industry’s wage bill,” the companies’ chief executive officers said in a statement. “We need to agree on an increase that is fair to employees on the one hand, and protects the companies, and employee jobs, on the other.”

They offered to raise total pay as much as 9 percent in the first year, 8 percent in the next and 7.5 percent in the third.

NUM Displaced

The AMCU has displaced the National Union of Mineworkers, Mathunjwa’s former union, as the dominant labor group at South Africa’s biggest platinum mines by demanding bigger pay gains.

Its membership and influence expanded after the deaths of at least 44 people, including 34 killed by police in a single day, during protests at Lonmin’s Marikana mine in August 2012.

“AMCU’s leaders must deliver to its rank-and-file to consolidate its newly won power in the platinum belt,” Mark Rosenberg, an Africa analyst at New York-based Eurasia Group, said by e-mail yesterday. “They are highly unlikely to accept less than a 10 percent increase in wage and housing allowances unless internal divisions undermine the strike.”

Police fired rubber bullets and water cannon to disperse a 3,000-strong crowd massed at an Anglo American Platinum mine in support of the walkout on Feb. 4. Two were arrested at Khuseleka mine, northwest of Johannesburg, according to Thulani Ngubane, a spokesman for the police in the North West province.

Police are investigating the burning yesterday of a vehicle belonging to an Impala worker, Ngubane said as companies stated that employees reporting for duty faced intimidation.

“It is still early in the battle,” Mathunjwa said in Cape Town yesterday. Workers are aware of risks in striking, they’re aware they’re losing wages and that mines are marginal, he said.

Platinum was little changed at $1,379 an ounce in London.

--With assistance from Andre Janse van Vuuren in Johannesburg. Editors: Tony Barrett, Ana Monteiro