Northam Platinum Strike Seen Setting Precedent for Wages

The outcome of a wage dispute at Northam Platinum Ltd., where a South African strike is in its third week, will set a precedent for the industry’s largest producers, Investec Plc and Stanlib Asset Management said.

Northam workers remain off the job even after the company raised a salary-increase offer to as much as 9 percent. The National Union of Mineworkers, or NUM, has demanded an average increase of 61 percent.

“If Northam settles at 9 percent, it does lower the chance of other miners getting single-digit settlements,” Albert Minassian, an analyst at Investec in Cape Town, said by telephone. “Unions need to be seen to be strong and fighting for their members.”

The three largest producers -- Anglo American Platinum Ltd., Impala Platinum Holdings Ltd. and Lonmin Plc -- also have been locked in talks with unions as workers push for higher pay and managers seek to keep a lid on spiraling costs. While the NUM used to be the biggest union at the companies, it’s recently been usurped by the Association of Mineworkers and Construction Union, which has demanded an even greater jump in wages.

“AMCU definitely would want to show at least a percentage point or so more than what NUM bargained for,” said Kobus Nell, an analyst at Stanlib, which manages about $50 billion in assets in Johannesburg. “I just don’t think the companies have room” to give more.

Topping Inflation

The AMCU is demanding some salaries be more than doubled to 12,500 rand ($1,236) a month. The rate of inflation in South Africa, where the platinum companies mine most of their metal, was 6 percent in September.

South Africa’s Commission for Conciliation, Mediation and Arbitration on Nov. 13 gave the AMCU the right to call a strike at Amplats, as the largest producer is known, after the union refused to accept a wage-increase offer of 7 percent. The union has yet to decide whether it will strike.

At Lonmin, the CCMA will facilitate talks with the AMCU after pay negotiations broke down on Nov. 14, the union’s National Treasurer Jimmy Gama said yesterday by phone.

At Impala, the AMCU on Oct. 28 decided to strike, without setting a date. The union has lowered its demand for basic wages at the company to 8,668 rand a month, which compares with a company offer of about 6,000 rand, an increase of 8.5 percent.

Johan Theron, a spokesman for Impala, declined to comment yesterday when contacted by e-mail. Amplats spokeswoman Mpumi Sithole was unable to comment when contacted by phone. Lonmin spokeswoman Sue Vey didn’t respond to an e-mail.

The NUM met with members at a mass meeting today, where they decided to continue with the strike, the union’s chief negotiator, Ecliff Tantsi, said in a text message. “Workers also resolved to stick with their demands.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE