Pravin Gordhan urges platinum industry to avoid strikes
Finance Minister Pravin Gordhan
South Africa’s ailing economy cannot afford more mine labour unrest, Finance Minister Pravin Gordhan has warned.
This comes after the platinum industry’s main trade union, Amcu, said it would launch a strike at the world’s top three producers this week.
A wave of sometimes violent strikes in the factory and mining sectors constrained growth to a sluggish 2% in 2013, hampering efforts by the government to create badly needed jobs as it braces for elections this year.
The rand turned weaker after Gordhan’s comments today, a day after members of the Association of Mineworkers and Construction Union (Amcu) voted to strike at the world’s biggest platinum producer, Anglo American Platinum.
Unionists have also elected to walk off the job at Impala Platinum and Lonmin. A simultaneous stoppage at the three would hit exports as the rand wallows near five-year lows versus the dollar.
Renewed labour strife will raise a red flag for ratings agencies after more than 50 people died in the Marikana massacre during violent mine protests in 2012 that triggered downgrades from Moody’s, Fitch and Standard and Poor’s.
TThe platinum industry needs to seriously get around the table,” Gordhan told the SABC in an interview today.
“We can least afford another round of strikes that will act as a destabilisation to the platinum sector which has had increasing difficulties over the past 18 months.”
Earlier this month, Moody’s cited weakening productivity and strike-related business losses, exacerbated by declining terms of trade, as a major credit challenge for South Africa.
It said: “The economy has never fully recovered its momentum following the global recession in 2009, partly due to domestic political and economic turbulence ignited by violent labour unrest and the associated uncertainty that it has created.”
Demands for wage increases well above inflation of 5.3% will also worry the Reserve Bank, which has been blocked from loosening policy further to help the economy by price pressures stemming from rand weakness.
The central bank will likely keep interest rates at a four-decade low of 5% at its first policy meeting of the year next week.
At Anglo American Platinum and Lonmin, union Amcu is seeking a minimum monthly wage of R12 500 for entry-level workers – more than double current levels, under the populist banner of a “living wage”.
At Impala, the union scaled back its demand late last year to just over R8 500 a month.
Rival union National Union of Mineworkers (NUM) said on Friday it had accepted overall wage increase offers of between 9.8 and 11.8% from mid-tier platinum producer Northam Platinum in a bid to end a 75-day strike by more than 7 000 miners.
Companies have said they can ill afford steep increases as power and other costs soar while prices for platinum, used in pollution-reducing automobile catalytic converters, remain depressed.
Today, Amcu confirmed it would also strike at gold mines where it has majority membership after rejecting the 8% pay hike that NUM, which still represents most gold miners, agreed with bullion producers last year.
Amcu has majority representation at AngloGold Ashanti’s Mponeng operation, the world’s deepest mine, Harmony Gold’s Kusasalethu and Sibanye Gold’s Driefontein mine.
Platinum mines not making money – Implats
Most platinum mines in South Africa are not making any money and cannot afford to pay workers R12 500 a month, Impala Platinum (Implats) has said.
“Business is struggling quite clearly. Most [platinum] mines in South Africa are not making any money,” Implats spokesperson Johan Theron told SAfm in an interview today.
“If you look at Impala, our wage bill is R7 billion, so a 10-odd percent increase is an extra R700 million, which simply we don’t have.”
He said the company was trying to discuss with the unions involved in the platinum sector strike on how to help them improve profitability.
“The conversation we are trying to have with unions is how do we work together to improve profitability so that we can make some of these demands affordable and I think that’s what we should be focusing on.”
A strike by the Association of Mineworkers and Construction Union (Amcu) at Impala, Lonmin and Anglo American platinum entered its second day today. Workers are pushing for an entry-level monthly salary of R12 500. The strike would continue during a meeting between the labour department, the mining companies and Amcu at the Commission for Conciliation, Mediation and Arbitration in Joburg.
Lonmin CEO Ben Magara told SAfm the company had been negotiating with the union since October.
“We have not found an answer, we have not found each other. The employees have chosen to strike because it’s their right. They [the unions] are hoping to shake the tree and hoping something will come down.”
Magara said the demands from Amcu was more than R12 500.
“It is a challenge for us, the industry cannot afford it. We have offered between eight and 8.5%,” he said.
On rand value, the minimum salaries were between R5 800 and R6 000, which would an 8% increase, he said. “This is about 3% higher than the current inflation in the country,” said Magara.
“We are challenged … We are hoping we find a solution.”
Asked about their strong share price, Magara said the long-term fundamentals of platinum remained attractive and robust.
“The reality is today we are not there yet, we are not delivering where we need it to be.We have to look at all the challenges and create profitable businesses.”
He said no one was benefiting from the strike.
“Every week that we lose, is 2% of their salary [our employees]. We are encouraged by the meeting we are going into now,” Magara said.
Theron said Amcu’s demands were detailed over five pages. The R12 500 was just one demand, he said.
– Sapa M&G