Platinum Producers Put Offer to Strikers as Union Talks End

Apr 25, 2014 11:33 am ET

(Updates with union mass meetings in fifth paragraph.)

April 25 (Bloomberg) -- The world’s largest platinum companies said they will put their latest pay offer directly to striking South African workers starting today, bypassing their union after talks failed to end the 13-week walkout.

Anglo American Platinum Ltd., Impala Platinum Holdings Ltd. and Lonmin Plc have “a duty to provide the details of the settlement offer to our employees and will do so forthwith,” they said in a joint statement. The companies held three days of discussions with the Association of Mineworkers and Construction Union about an increased offer made April 17.

More than 70,000 members of the union have been on strike since Jan. 23 in a walkout that has “crippled the platinum sector and has brought untold hardship to employees, their families, communities and the companies,” the producers said in a statement yesterday. South Africa’s longest mining strike has cost the companies about 14.7 billion rand ($1.4 billion) in lost revenue and workers 6.5 billion rand in income, they said.

The producers “arrogantly rebuffed” the union’s latest proposal to reach a settlement, the AMCU said in a statement. The union plans mass meetings with workers to explain developments and “it is difficult to predict how our members will react and what mandate they will give us,” it said.

The AMCU was holding mass meetings today at Impala and Lonmin, union Treasurer Jimmy Gama said in a text message. A rally is planned for April 27 in the platinum mining town of Rustenburg, SABC radio news reported.

Revised Offer

Under last week’s revised proposal Amplats, as Anglo Platinum is known, Impala and Lonmin offered to raise pay including bonuses and living allowances to 12,500 rand a month by 2017, or as much as 10 percent annually, from an offer of 9 percent before. That’s short of the union’s demand for monthly basic pay excluding bonuses of 12,500 rand within four years. South Africa’s inflation rate was 6 percent in March.

“We strongly urge the AMCU leadership to take this fair settlement offer to their members and to let them decide,” Amplats Chief Executive Officer Chris Griffith, Impala’s Terence Goodlace, and Ben Magara of Lonmin said in the joint statement.

Amplats will start communicating the details of the proposal today, using text messages and setting up mass meetings together with community and traditional leaders across the platinum belt west of Johannesburg and in provinces that the workers come from, which are far from the mines, spokeswoman Mpumi Sithole said in an e-mailed response to questions.

Employees’ Choice

“It’s still our intention to do it on the back of an agreement with AMCU,” Johan Theron, a spokesman for Impala, said by phone from Johannesburg. “In the end it’s not for AMCU to say yes or no, it’s for the employees to say yes or no.”

Lonmin will also communicate the offer directly to employees by text messages and radio announcements, spokeswoman Susan Vey said by phone. “We want to start it immediately and we’ve got various methods of doing that.”

Amplats’ production dropped 39 percent to 357,000 ounces in the first quarter from 583,000 ounces a year earlier, parent Anglo American Plc said yesterday. Anglo cut its full-year production estimate by as much as 13 percent and said more reductions are possible because of the labor action.

“This extends the timeline for the end of the strike because a cross-producer-AMCU deal is much less likely, so it won’t get done by the end of the month,” Mark Rosenberg, an Africa analyst at New York-based Eurasia Group, said in an e- mail.

Industry’s Longest

The strike is the country’s longest mining-industry stoppage, according to the Chamber of Mines.

“We’ll get responses from workers, we’ll get responses from the AMCU leadership at the mine and AMCU national leadership,” Impala’s Theron said. “I think in 10 days time or so, what’s the next step may be clearer.”

If employee begin to accept the direct deal, they will start returning back shaft by shaft “and then the trickle will become a flood,” Andrew Levy, who heads his own labor-research company in Johannesburg, said in a phone interview. “As soon as people start coming back to work then the strikers try to stop them. The risk of violence is increased quite significantly.”

An AMCU official was killed in clashes with police in February and two others were arrested for the attempted murder of an Amplats worker in April. Other attacks have been reported.

Amplats continues to work with the police and has set up an anonymous line for employees to report any incidents, Sithole said.

--With assistance from Kevin Crowley and Tshepiso Mokhema in Johannesburg.