Platinum Wage-Strike Talks Suspended as No Deal Reached

Talks between the world’s three largest platinum producers and the South African union that began a strike two weeks ago have been suspended after the sides were unable to reach a settlement.

Anglo American Platinum Ltd. (AMS), Impala Platinum Holdings Ltd. (IMP) and Lonmin Plc (LON) have lost about $180 million in revenue since the strike started Jan. 23, they said in a joint statement today. Employees have lost wages and benefits of around $80 million, while the cost to the country is some $360 million, they said.

A date will be set for a resumption of negotiations, facilitated by South Africa’s Commission for Conciliation, Mediation and Arbitration, the producers said.

The Association of Mineworkers and Construction Union has more than 70,000 members on strike in support of demands that include a more than doubling in monthly basic pay to more than 12,500 rand ($1,120). The companies argue that about 45 percent of South African platinum producers fail to break even and that a prolonged strike will cause losses and industry restructuring.

“Acceding to AMCU’s demands –- which have not shifted since negotiations began –- is simply not feasible, and would effectively mean a doubling of the industry’s wage bill,” Anglo American Platinum Chief Executive Officer Chris Griffith, Impala CEO Terence Goodlace and Lonmin CEO Ben Magara said in the statement. “We understand that employees have real needs, but we need to agree on an increase that is fair to employees on the one hand, and protects the companies –- and employee jobs -- on the other.”

Union Power

The AMCU, led by former National Union of Mineworkers member Joseph Mathunjwa, has displaced the NUM as the dominant labor group at the country’s biggest platinum mines through arguing for larger pay increases. It has gained in membership and influence since the deaths of at least 44 people, including 34 killed by police in a single day, during labor protests at Lonmin’s Marikana operations in August 2012.

“It is still early in the battle,” Mathunjwa told reporters in Cape Town today. Workers are aware there is risk in striking, they’re aware they’re losing wages and that mines are marginal, he said.

The platinum producers have offered to raise total pay by as much as 9 percent in the first year, 8 percent in the second and 7.5 percent in the third.

“AMCU’s leaders must deliver to its rank-and-file to consolidate its newly-won power in the platinum belt,” Mark Rosenberg, an Africa analyst at New York-based Eurasia Group, said in e-mailed comments today. “They are highly unlikely to accept less than a 10 percent increase in wage and housing allowances unless internal divisions undermine the strike. In this case, more widespread violence becomes likely, but it will probably also facilitate an end to the strikes.”

Rubber Bullets

Police fired rubber bullets and water cannon to disperse a 3,000-strong crowd massed at an Anglo American Platinum mine in support of the walkout yesterday. Two were arrested at Khuseleka mine, northwest of Johannesburg, according to Thulani Ngubane, a spokesman for the police in the North West province.

Police are investigating the burning today of a vehicle belonging to an Impala worker, Ngubane said as companies stated that employees reporting for duty faced intimidation.

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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