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Impala Dispute Deepens as Workers Demand Equal Pay Rises

Impala Platinum Holdings Ltd. may have to raise pay even as energy costs surge or face prolonging an almost four-week closure of the world’s biggest mine for the metal after selective wage increases triggered violent riots.

In the past week protesters set fire to cars, barricaded roads and attacked miners going to work with axes, traditional fighting sticks and stones at the mine near Rustenburg, 105 miles (170 kilometers) northwest of Johannesburg. The unrest follows Impala’s firing of 17,200 people for striking illegally. Three have been killed and more than 100 arrested in the violence. It’s main labor union has now demanded equal pay raises for all workers.

A pay rise would set “quite a dangerous precedent for others,” Justin Froneman, an analyst at SBG Securities Ltd., said by phone from Johannesburg yesterday. “If Impala does agree to raise wages, we could see a flow-through impact on industry costs.”

Impala, and South African rivals including Anglo American Platinum Ltd. and Lonmin Plc that together produce about three quarters of the world’s platinum, operate power-intensive smelters in a country where electricity prices have almost tripled over the last four years. Power and labor account for about two-fifths of Impala’s costs.

A “substantial proportion of the South African platinum group metals industry is currently loss-making,” Credit Suisse Group AG said in a note Feb. 21.

Sticks, Whips

Anglo American Plc said Feb. 17 it will review its platinum business as returns lag expectations. The cost per platinum ounce produced by Impala rose 9.9 percent last year as wage and utility increases exceeded inflation, it said Feb. 16. South Africa’s annual inflation was 6.3 percent in January.

“Our problem is money,” Emmanuel Ntetha, a dismissed rock-drill operator, said on the fringe of the Freetown township where he and thousands of others demonstrated within sight of Impala’s mine, carrying fighting sticks known as knobkieries and whips. “People have become angry here.”

Ntetha and about 20 other fired workers said in interviews that they are demanding pay of 9,000 rand ($1,162) a month after tax and other deductions, more than twice the 3,500 rand he says he earns now as a police squad looks on across rock and log debris lying by the roadside after riots that saw some of those who wanted to go to work beaten by protesters. About 45,000 people work at the mine.

No Control

At the mine hospital lies a 62-year-old man who lost an eye and had his skull fractured after a mob attacked him while he was cycling to work. In a hospital bed nearby a 38-year-old man has a split cheek, a stitched scalp and a broken arm, a result of an attack with an ax and stones. The men and hospital management requested anonymity for fear of reprisals.

Ntetha is one of about 5,000 rock-drill operators who went on an illegal strike on Jan. 20, saying they were passed over when only some miners were given a raise. Many say they have lost faith in the National Union of Mineworkers, the only recognized union at the operation, because they say it ignored their demand that all workers get the increase.

Impala shares closed trade at 166.20 rand in Johannesburg, taking its decline since Jan. 20, when the strike began, to 6.6 percent, compared with the 2.2 percent drop in the 21-member FTSE/JSE Africa Mining Index. Platinum has risen for 5 days, gaining 6.1 percent over that period to trade at $1,724.25 an ounce in London.

Insults, Heckling

“NUM is not representing us for our views and our demands,” Mzoxolo Zolwana, a 34-year-old boilermaker, said Feb. 21, after he and hundreds of others heckled NUM representatives, shouting “voetsek,” an Afrikaans insult that translates as “go away.”

While Impala relies on NUM to call workers to order to start formal talks “mistrust” has been created by insufficient communication between the union’s local branch and members, Senzeni Zokwana, NUM’s president, said in a Feb. 21 interview on the sidelines of a meeting with protesters.

Zwelinzima Vavi, the general secretary of the Congress of South African Trade Unions, of which NUM is an affiliate, told protesters that Impala handled the matter “very badly.” Vavi is due to address workers near Rustenburg again today and Impala said it will meet NUM representatives today or tomorrow.

Miners got an 18 percent increase while rock-drill operators didn’t, Vavi told workers workers at a sports ground near North Hostel, a company-run residence for miners.

Security, Guards

Impala in January agreed to bring miners’ accommodation benefits in line with other worker categories to try stem its annual staff turnover rate of as much as 25 percent in each of the past three years, Group Executive for People Johan Theron said. They also received a “small” pay increase to reflect “more intense” government safety audits, he said Feb. 21.

Rock-drill operators are paid an average of about 6,000 rand a month leaving most them with about 4,000 rand after deductions including those for goods bought from mine shops and for garnishee orders from companies other than Impala, Theron said. They can also earn a production bonus that averages about 2,000 or 3,000 rand

“Impala remains committed to look at any legitimate demand and will endeavor to resolve it,” he said.

The initial strike brought the Rustenburg mine, which accounts for about 12 percent of global annual platinum production and over half of Impala’s total output, to a halt on Jan. 30, resulting in 3,000 ounces of lost platinum output a day. It also produces palladium, rhodium and other metals.

Reinstated Workers

April platinum deliveries from the mine may be about 50 percent less than usual, Group Executive for Marketing Derek Engelbrecht said.

“It’s an absolute guess, because it’s too early to know,” he said by mobile phone yesterday.

Impala has re-hired at least 8,368 workers so far, rather than reinstating them, which the union doesn’t agree with because they lose accumulated benefits.

Many say they won’t go back unless pay is raised.

“I’m angry, I want my children to go to school and they can’t; and we don’t even have food in the house,” said Sqaobalo Phatalala, a 46-year-old rock driller with six children who has worked at the mine for nine years. “Prices for food and school fees are going up, but here our salaries aren’t,” he said after armed security guards restrained him from climbing a fence to confront union representatives.

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