Platinum Companies Start Mediation With Union to End Pay Strike

May 20, 2014 6:00 pm ET

May 21 (Bloomberg) -- The world’s three biggest platinum- mining companies and the main union at their South African operations will today start mediation to try end a pay strike that’s crippled output of the metal for 17 weeks.

Anglo American Platinum Ltd., Impala Platinum Holdings Ltd. and Lonmin Plc will hold meetings with the Association of Mineworkers and Construction Union for as many as three days, the companies said in a statement published on a joint website yesterday. The AMCU had asked the Labour Court to prevent employers from communicating directly with workers through text messages about their latest wage offer after the union rejected the last proposal earlier this month.

“Reaching an affordable and sustainable agreement with AMCU would be in all of our interests, and that remains our preference,” the companies’ chief executive officers said in the statement. “We remain committed to on-going dialogue with AMCU and other stakeholders to find a way to end the strike. The companies welcome the intervention of the Labour Court.”

More than 70,000 members of the AMCU have been on strike since Jan. 23, costing the producers 18.8 billion rand ($1.8 billion) in revenue and employees 8.3 billion rand in wages. The miners, who are not paid during the protest, are demanding wages be more than doubled for entry-level workers by 2017.

Wage Demands

The union wants basic monthly pay, without benefits, to reach 12,500 rand by 2017 for entry-level underground employees. The demands would equate to a 30 percent increase in the first year of the agreement, which the companies say is unaffordable. They’re offering raises of as much as 10 percent annually.

Labour Court Judge Hilary Rabkin-Naicker will oversee the process, the companies said.

Supply shortages for platinum and palladium will be the largest in more than three decades this year on stronger demand from car companies and restricted supplies, Johnson Matthey Plc said yesterday.

Platinum consumption will beat supply by 1.22 million ounces, compared with 940,000 ounces in 2013, London-based Johnson Matthey said in its platinum-group metals report.

Palladium’s deficit will expand to 1.61 million ounces, from 371,000 ounces last year. They would be the biggest shortfalls on record, based on data going back to 1975 for platinum and 1980 for palladium on the company’s website.

Demand from automakers, which use the metals in pollution- control devices, helped keep the materials in shortages since 2012.

South Africa is the world’s biggest producer of platinum, which has gained 7.2 percent this year. It’s the second-largest of palladium, which has increased 16 percent.

--With assistance from Nicholas Larkin in London.