Biggest Platinum Companies Hurt as Union Usurps Old Guard

Thousands of Lonmin Plc (LMI) workers sat in the sun and listened to Joseph Mathunjwa, leader of the most popular union in South Africa’s platinum-mining belt, tell them he wasn’t afraid to die in the fight for their rights.

The May 15 speech at the Wonderkop stadium near Rustenburg, 116 kilometers (72 miles) northwest of Johannesburg, comes nine months after police killed 34 people nearby when they dispersed protesters a week into a violent strike at Lonmin’s Marikana mine. Since then, Mathunjwa’s Association of Mineworkers and Construction Union has supplanted the National Union of Mineworkers as the dominant force at mines owned by the world’s biggest platinum producers.

“Even if you kill me or assassinate me there are those who will follow and take the baton,” the 48-year-old union leader told cheering workers in Xhosa, the main language of the Eastern Cape province, from where Lonmin draws migrant labor. “My spirit will live. My spirit will go ahead to liberate the working class,” he told the workers who gathered days after an AMCU leader was shot dead in a tavern.

While the AMCU’s message of higher wages and exploitation by company executives mirrors that of the NUM, dissatisfaction with the 31-year-old union has grown with its ties to the ruling African National Congress and accusations that its leaders are too close to management.

Source: AFP/Getty Images

Joseph Mathunjwa, president of Association of Mineworkers and Construction Union (AMCU), addresses thousands of Lonmin mine striking workers, at the Wonderkop stadium in Marikana during an illegal strike on May 15, 2013. Close

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Source: AFP/Getty Images

Joseph Mathunjwa, president of Association of Mineworkers and Construction Union (AMCU), addresses thousands of Lonmin mine striking workers, at the Wonderkop stadium in Marikana during an illegal strike on May 15, 2013.

Politicians, Businessmen

Kgalema Motlanthe, South Africa’s deputy president, served as NUM general secretary, while Gwede Mantashe, the secretary general of the ANC, also held the union post. James Motlatsi, the first NUM president, was AngloGold Ashanti Ltd.’s deputy chairman while Cyril Ramaphosa, who co-founded the NUM in 1982 with Motlatsi and helped lead a 1987 strike involving 300,000 workers, is now the deputy president of the ANC and the second-richest black South African, according to Johannesburg’s Sunday Times. The investment company he controls also owns a stake in Lonmin’s mines.

“We’re not too close to the companies,” Lesiba Seshoka, an NUM spokesman, said yesterday. “We operate the same way we always have.”

Union leaders “have to some extent learned to enjoy the benefits of a more comfortable life,” said Andrew Levy, who heads his own labor research company in Johannesburg. “They’ve just lost touch with the guys on the factory floor or down on the coal face.”

Plunging Rand

The decline of what was South Africa’s biggest labor union has been accompanied by violent inter-union rivalry that last year shut platinum, chrome and gold mines and cost more than 10 billion rand ($1 billion) in output, shaving half a percentage point off economic growth, according to the National Treasury. It’s disrupting how wage talks are conducted in South Africa’s biggest export industry, may cost thousands of jobs and is threatening the ANC, which has an alliance with the Congress of South African Trade Unions, of which the NUM is a member.

The rand fell as much as 0.7 percent to 9.8574 per dollar, the weakest level since March 18, 2009, and was at 9.7907 at 5:16 p.m. in Johannesburg. Gold and platinum companies are the four worst-performing shares on an index of the 42 biggest stocks traded in Johannesburg this year.

Mathunjwa, whose speech was peppered with references to Christianity and its role in the workers’ struggle, has taken the opportunity to expand his union. At the stadium, AMCU officials wouldn’t speak to reporters before his address.

Pay Increases

Mathunjwa is a one-time member of the NUM who left in 1998 after a quarrel with its leadership to form the AMCU at coal mines. In less than a year, the union has more than doubled its membership to 120,000, he said. The NUM lost about 38,000 members in the year through February to 285,000.

While the AMCU, which is trying to have the NUM deregistered as a union at Lonmin, has yet to table formal wage demands, gold and coal negotiations for companies including AngloGold are expected to start in June. Sibanye Gold Ltd. (SGL), South Africa’s second-largest producer of the metal, expects to cut 1,110 jobs at an unprofitable mine, the company said today. The NUM is seeking pay increases of as much as 61 percent, more than ten times inflation.

Companies “could do with wage cuts instead of wage increases, simply to keep the mines operating,” Stephanie Barsdorf, a London-based analyst at Noah Capital Markets, said in a May 20 note to clients.

Amplats, Impala

Anglo American Platinum Ltd. (AMS), the world’s biggest producer of the metal, proposed cutting as many as 14,000 jobs to try return to profit, later reducing that to 6,000. Impala Platinum Holdings Ltd. (IMP), the second-largest, on May 2 said more of its shafts are producing at a loss.

South Africa supplies about three quarters of the world’s platinum and is the continent’s biggest gold producer.

The AMCU’s membership rose following the start of an illegal six-week strike at Impala Platinum in February 2012 after some workers received a pay rise outside of an agreement with the NUM, Crispen Chinguno, a PhD fellow at Johannesburg’s University of the Witwatersrand, said in a May 20 e-mail.

“AMCU has been on the horizon for a long time and was failing to make a significant breakthrough in the big mines because of recognition agreements which barred union competition,” Chinguno said. “The NUM had lost its legitimacy. It was just a matter of workers waiting for any alternative. This came in the form of AMCU.”

Powerful Allies

Still, the NUM has powerful allies in the form of the ANC and a relationship with the Chamber of Mines, through which it has collective bargaining agreements for the gold and coal industries.

While the NUM regularly holds leadership elections and has an investment company, the AMCU operates from Witbank in the coal-rich Mpumalanga province and hasn’t yet held polls, according to Chinguno.

The AMCU has come under attack from Zweli Mkhize, the treasurer-general of the ANC, and Susan Shabangu, the country’s mines minister.

“There is a difference between militancy and anarchy that we see growing in newly formed mining unions,” Mkhize told the NUM’s central executive committee on May 23. “It pains us comrades to see this labor relations and negotiation framework being undermined and destroyed through anarchy, violence, intimidation, murders and illegal wild cat strikes.”

Mkhize urged companies not to give into “scare tactics” while Shabangu told the same meeting that the AMCU’s actions amounted to an attack on “freedom of association, assembly and speech.”

The ANC “is clearly drawing the battle lines,” Susan Booysen, a political analyst at the university of the Witwatersrand, said on May 24.

Mathunjwa sees no room to compromise.

“Comrades, NUM’s time came to an end in October 2012, but the employer is still keeping it on as a recognized union,” Mathunjwa said, referring to Lonmin. “Keeping the NUM as a recognized union was done so that it can seek opportunities to spark conflict among AMCU members.”

To contact the reporter on this story: Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net

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

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