Goldman Sees No Winners in Platinum Strike as Final Deal Awaited

Neither South Africa’s dominant platinum union nor the top three producers it has targeted in an almost five-month pay strike will emerge as winner from the standoff, according to Goldman Sachs Group Inc.

The companies will be left with damage to some mines and delays while they get their workforce back up to speed, while the Association of Mineworkers and Construction Union will fall short of delivering for members on their demands, Goldman Sachs said in a June 13 note to clients.

Union members late last week accepted a pay proposal “in principle” from Anglo American Platinum Ltd. (AMS), Impala Platinum Holdings Ltd. (IMP) and Lonmin Plc. (LMI) The AMCU has said it has conditions to put to the companies before agreeing to a deal.

“We are not expecting any developments until the long weekend is over,” Alan Fine, a Johannesburg-based spokesman representing the producers, said in an e-mail today. June 16 is a public holiday in South Africa. AMCU Treasurer Jimmy Gama didn’t answer a call or respond to a text message seeking comment.

The union’s members have been on strike since Jan. 23 in support of their demand to more than double basic monthly pay to 12,500 rand ($1,165). The producers’ latest offer includes wage increases of as much as 1,000 rand.

AMCU members have raised conditions on issues including the length of the agreement, back pay, increases in living-out allowances and the reinstatement of jobs, union President Joseph Mathunjwa said at rallies last week.

‘Slightly Improved’

“We believe the deal is only slightly improved for workers compared to the offer which was proposed within a month of the strike,” and was accepted by the union because of pressure from members, Eugene King, a Goldman Sachs analyst, wrote in in the note. “Mines will be damaged as panels will have collapsed, while organizing and retraining workers will take time.”

The three companies said they have lost 22.8 billion rand ($2.1 billion) in revenue in the longest and costliest strike in South Africa, source of about 70 percent of the global platinum mined.

“Lonmin will likely rebound strongly post-strike as inventory can be converted to cash quickly and the mining restart will see concentrate coming through” in the next two months, King wrote. Impala will be confronted by delays to new shafts following the strike, he said.

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

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

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