Bloomberg Anywhere Login


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Bloomberg News

South African Union Fight Threatens Platinum Producers

June 14, 2012

S. African Union Fight Threatens Biggest Platinum Producers

Mineworkers drill at the rock face at the Impala Platinum mine in Rustenburg. Photographer: Nadine Hutton/Bloomberg

A clash between unions is threatening to spread across South Africa’s platinum-mining belt and disrupt production in a region accounting for three-quarters of world supplies of the precious metal.

Already this year fighting between the 30-year-old National Union of Mineworkers and the insurgent Association of Mineworkers and Construction Union, or AMCU, has led to four deaths and a strike that closed the world’s biggest platinum mine, Impala Platinum Holdings Ltd.’s (IMP) Rustenburg operation, for six weeks.

Now AMCU says it may call a fresh strike at the mine to gain the right to deal with the company and it’s recruiting at the mines of Anglo American Platinum Ltd. (AMS), the world’s largest platinum producer, having secured a foothold at Lonmin Plc’s (LMI) Karee operation. For the unions about 100 million rand ($12 million) in annual fees are at stake. For the companies mines producing about 5.5 million ounces of platinum a year, worth $8.2 billion at current prices, are threatened.

“The impact on the mining industry could be severe,” Anne Fruhauf, an analyst at New York-based risk research company Eurasia Group, said in a June 7 e-mailed response to questions. “Employers believe that union rivalry could benefit their negotiating position in the long run, but such long-term gains may come at a high price in the short term, by causing major mine disruption and production losses.”

The price of platinum, used in jewelry and in equipment to cut pollution from cars, has plunged 17 percent over the last year to $1,488.38 an ounce as of 4:03 p.m.. in London.

Worst Performers

In February Anglo Platinum announced a review of its operations because of unsatisfactory profits, last month Lonmin posted a first-half loss and Impala said third-quarter production fell 46 percent because of the strike. Aquarius Platinum Ltd. (AQP) this week idled a mine shaft in South Africa and in May Eastern Platinum Ltd. (ELR) halted development of a mine.

The shares of the three companies, all of which are based in Johannesburg, are the worst performers over the past year on an index of the 40 biggest companies traded on the city’s stock exchange with with Anglo Platinum falling 20 percent, Impala 21 percent and Lonmin 43 percent. Impala rose 0.9 percent to 143 rand by the close of trading in Johannesburg. Anglo Platinum rose 0.2 percent to 511.90 rand and Lonmin fell 1.7 percent to 93.26 rand.

Fires, Barricades

“We’re worried about the state the industry finds itself in,” Justin Froneman, an analyst at Johannesburg’s SBG Securities, said in an interview. “The industry just isn’t making a return. Local-currency prices for platinum group metals are almost unchanged over the last two years while mining inflation has increased about 15 percent a year for the last three.”

The NUM, which was founded in 1982 and became the country’s largest labor union as it fought against apartheid with the African National Congress, says AMCU is using force to take its members at Impala’s mine 90 miles (145 kilometers) northwest of Johannesburg.

In addition to the deaths, the strike resulted in at least 50 people being injured and cost more than 120,000 ounces of production. Protesters set fire to cars, barricaded roads and miners going to work were attacked with guns, axes, traditional fighting sticks and stones.

Pay Rise

The unrest began when rock-drill operators went on strike illegally after some workers at the mine were given a pay rise. They were later fired by Impala and compelled to reapply for their jobs. That unrest degenerated into inter-union clashes as striking workers tried to prevent colleagues from working. Rock drill operators including Emmanuel Ntetha said in February that they had lost faith in the NUM because it did not ensure that all workers got the same pay rise.

NUM President Senzeni Zokwana said at the time that the local branch of the union hadn’t communicated adequately with its members at the mine.

“Our members are forced to resign from NUM through assault or killing,” Eddie Majadibodu, chief negotiator for the NUM at Impala, said by phone on June 4.

AMCU, which says it doesn’t advocate violence, recruited half of Rustenburg’s 30,000 employees and has the right to be the dominant union in terms of South Africa’s labor law, it said in a legal notice to Impala. The company on May 29 said that NUM has lost at least 10,813 members.

‘Strongly Recruiting’

“NUM has failed to represent Impala Platinum Mine employees,” AMCU President Joseph Mathunjwa said at a Johannesburg press conference on June 6. NUM negotiated a poor wage deal for workers, sparking the strike in January, he said. “Now employees have found a new home in AMCU.”

AMCU is “strongly recruiting” at Anglo Platinum and has gained more than 5,000 members at Lonmin, the third-largest producer, Mathunjwa said.

“The rivalry for membership between the unions could be a feature for the foreseeable future with a corresponding increase in the risk of escalation of costs and disruptions to production,” Lonmin said in a stock exchange statement on May 14.

Workers pay the unions 1 percent of their basic salary, excluding overtime pay and benefits such as medical insurance and housing allowances, for membership.

At about 80 rand a month per employee, the Rustenburg mine alone generates about 1.6 million rand a month in membership fees, Johan Theron, Impala’s group executive for personnel, said June 4. About two-thirds of employees at the mine belong to unions, he said.

‘Shock Waves’

It’s difficult for new unions to win organizational rights, he said.

“The framework doesn’t lend itself to change easily,” Theron said. “When change occurs, there are a lot of shock waves.”

NUM, whose Secretary-General Frans Baleni accuses Impala of collaborating with AMCU, may be underestimating “how unhappy their own people are with them,” Theron said. While “there may be people who were forced to join AMCU,” it’s “naive” to think that thousands were forced, he said.

The NUM, which says it has about 320,000 members, is an affiliate of the Congress of South African Trade Unions, a political ally of the ruling ANC.

AMCU, formed in 1998 by former NUM leaders at coal mines, is based in Emalahleni, which lies in eastern South Africa’s coalfields. AMCU is an apolitical organization with about 50,000 members, the union’s Mathunjwa said.

AMCU’s arrival at Impala and African Rainbow Minerals Ltd.’s (ARI) Two Rivers venture a few years ago also led to a strike, Theron said. Now, there is a peaceful multi union committee and the mine performs well, he said.

The Rustenburg mine “is just bigger and the stakes are bigger,” Theron said. “People will get hurt. You can’t put a cost to that.”

To contact the reporter on this story: Carli Cooke in Johannesburg at

To contact the editor responsible for this story: John Viljoen at

blog comments powered by Disqus