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Platinum Miners Say Strike Causing Irreparable Damage

The largest platinum producers said an eight-week strike by members of the biggest union at their South African operations started causing irreversible damage to the mines, with sales losses exceeding $925 million.

There is still no dialog over the impasse with the Association of Mining and Construction Union, which has led more than 70,000 employees on strike since Jan. 23, Anglo American Platinum Ltd. (AMS), Impala Platinum Holdings Ltd. (IMP) and Lonmin Plc (LMI) said in a joint statement today. Workers have lost more than 4.4 billion rand ($406 million) in wages, they said.

The financial cost of the strike didn’t “tell the full story,” the producers said. “Mines and shafts are becoming unviable; people are hungry; children are not going to school; businesses are closing and crime in the platinum belt is increasing.”

The AMCU is demanding basic wages be more than doubled within three years to 12,500 rand a month, compared with current minimum pay of 5,000 rand to 6,000 rand. Employers have offered increases of as much as 9 percent, compared with South Africa’s inflation rate of 5.9 percent as of February. The country accounts for more than two-thirds of the world’s mined platinum, used for jewelry and catalytic converters in vehicles.

Assessing Faces

The Commission for Conciliation, Mediation and Arbitration will meet the AMCU tomorrow after talks between producers and the union broke down on March 5, Nerine Kahn, a director at the state mediator, said by phone. The CCMA will meet employers at a later stage, she said.

“We’re continuing our mediation and facilitation,” Kahn said.

Impala, the second-largest producer, is inspecting its mines to assess rock faces, possible copper theft and underground gas levels, Johan Theron, a spokesman for the Johannesburg-based company, said yesterday by phone. The company’s Rustenburg Lease mines, which accounted for 58 percent of its mined output for the six months ended Dec. 31, have about 600 underground rock-face panels, each measuring approximately 400 meters (1,314 feet), Theron said.

About 16 percent of rock faces were no longer safe to mine due to deterioration, Chief Executive Office Terence Goodlace said Feb. 27. “One can expect this to become more so as time goes on,” Theron said. The cost of repairing some damaged rock faces won’t be viable and they may be closed indefinitely, raising the risk of job losses, Theron said.

The producers are open to discussions with the AMCU as long as the union is prepared to negotiate “within a reasonable settlement zone,” the companies said in the statement.

March Planned

The AMCU maintains its demands, President Joseph Mathunjwa said today by phone. “For those who think that the strike is too long, let them put their money together to meet our demands,” Mathunjwa said. The union will be marching to Impala’s head office on March 27 with a list of demands, he said.

Employers are reviewing alternative options to end the strike, Charmane Russell, a spokesman for the producers at Russell & Associates, said yesterday in an e-mailed response to questions.

The companies could unilaterally implement a wage increase conditional on individual employees accepting it, or re-organize operations, Jacques van Wyk, a director of Werksmans Attorneys in Cape Town, said by phone yesterday. A third option would be to hire temporary workers, Van Wyk said.

Other Options

“All these are theoretically possible, but remain very difficult to implement in practice,” he said.

The duration of the strike hasn’t yet exceeded the point where employers will consider alternatives to a negotiated settlement, Theron said. “We’re looking at other options and we’ll pursue those in parallel to talks,” Theron said. “Those are time-dependent.”

All three producers were well positioned to withstand revenue losses due to the strike even though it was difficult to quantify how much more they will lose because of infrastructure damage, Albert Minassian, an analyst at Investec Ltd. (INL) in Cape Town, said yesterday by phone.

They “can hold out for six months without being that stressed, from an income perspective,” Minassian said. The companies may consider implementing alternative measures to end the strike should another round of talks fail, he said.

“If it is a deadlock, then they would need to go that route,” Minassian said.

To contact the reporters on this story: Andre Janse van Vuuren in Johannesburg at ajansevanvuu@bloomberg.net; Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net

To contact the editors responsible for this story: John Viljoen at jviljoen@bloomberg.net Alex Devine, Tony Barrett

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