Bloomberg News

Security Tightens at Platinum Mines as 70,000 Set to Strike (1)

January 22, 2014

South Africa deployed extra police across its platinum belt, the world’s richest deposit of the metal, to tighten security as at least 70,000 workers prepared to begin a strike at the start of today’s early shift.

Anglo American Platinum Ltd. (AMS), Impala Platinum Holdings Ltd. (IMP) and Lonmin Plc (LMI), the world’s three largest producers, put increased safety measures in place as the nation sought to avoid a repeat of labor unrest that claimed the lives of at least 44 workers in the area, northwest of Johannesburg, in August 2012.

The strike by the Association of Mineworkers and Construction Union will disrupt operations accounting for about 70 percent of global output of the precious metal. The union says it will maintain the walkout until its demand that wages for the lowest-paid entry-level miners are more than doubled to 12,500 rand ($1,150) is met.

The South African Police Service sent additional officers to the platinum producing areas of the North West province “to make sure that whoever is going to work or coming out of work finds security,” spokesman Thulani Ngubane said by phone. Police would be in place “in the streets and public areas, so that we don’t have problems of people intimidating and stopping other going to work,” he said.

Fewer AMCU members will go on strike than was originally planned. A Johannesburg labor court judge yesterday ruled that the union can’t begin a simultaneous strike by about 20,000 of its members at some of South Africa’s largest gold mines until he delivers a ruling Jan. 30 on whether their action is legal.

Amplats Shutdowns

Amplats, as the largest producer is known, yesterday started shutting down operations at sites where the AMCU is the majority union, spokeswoman Mpumi Sithole said by phone.

Impala, the second-biggest producer, has closed some operations and canceled the night shift to prevent non-striking employees from having to arrive or leave during darkness, spokesman Johan Theron said by phone. “We don’t want to create an impression the company is trying to break the strike by continuing as normal,” he said.

Lonmin’s operations will continue throughout the night until the strike starts, spokeswoman Sue Vey said.

While police will maintain order, those involved in the strike must cooperate with the authorities, Thabo Masebe, a spokesman for South African Deputy President Kgalema Motlanthe, said by phone.

Peace Agreement

“We have the assurance from the parties that they will conduct their affairs within the law,” Masebe said. Motlanthe last year brokered a peace agreement whereby mining companies and unions committed to keep to the law during disputes. The AMCU didn’t sign the agreement.

The union will respect the right of employees who choose to go to work, President Joseph Mathunjwa said this week.

The National Union of Mineworkers, which the AMCU displaced as the dominant representative of workers in the platinum industry, said its biggest concern was the safety of workers in residential areas near the mines.

“We will only be satisfied if our members come to and go from work unharmed,” Erick Gcilitshana, NUM’s acting chief of negotiation at Johannesburg-based Amplats, a unit of Anglo American Plc (AAL), said by phone.

The spot price of platinum, used in jewelry and catalytic converters that reduce harmful emissions from passenger cars, has climbed 5.9 percent since Dec. 31. It traded 0.4 percent lower at $1,452.13 an ounce at 10:51 a.m. in Singapore after gaining to $1,472 on Jan. 20, the highest level since Nov. 7.

Lost Wages

The lowest-paid underground platinum workers earn about 5,500 rand a month, excluding benefits. Employers have offered increases of as much as 8.5 percent, 3.1 percentage points above South Africa’s inflation rate.

Platinum companies lost a combined 879,400 ounces of production in 2012 and 2013 during strikes, while workers gave up 1.2 billion rand in wages, the chief executives of the three producers said Jan. 21 in a joint statement.

“AMCU’s current wage increases are unaffordable and unrealistic,” the CEOs said. “It is of great concern to the platinum companies that employees are being made promises by AMCU that cannot be delivered upon.”

To contact the reporter on this story: Andre Janse van Vuuren in Johannesburg at ajansevanvuu@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net


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