Anglo American Platinum Ltd., the world’s biggest platinum producer, has plenty of stockpiles to supply customers even as a strike in South Africa enters its tenth week, Chief Executive Officer Chris Griffith said.
The company is operating at 60 percent of normal capacity and still has about 215,000 ounces of platinum stockpiles, half the amount it had when the strike started Jan. 23, Griffith told reporters today in Johannesburg. He declined to say when the stockpiles would run out.
“We certainly have the ability to continue for a while longer and a good while longer,” Griffith said. “Even if we could not continue to supply our customers from production, we would do it through other methods, and if that means buying in volume we would do so.”
About 70,000 employees who are members of the Association of Mineworkers and Construction Union across the world’s three biggest platinum companies, which also include Impala Platinum Holdings Ltd. and Lonmin Plc, are striking over pay. They’re asking that basic monthly wages be more than doubled to 12,500 rand ($1,180) within three years, a demand that Griffith said would make half the industry unprofitable.
Amplats, Impala and Lonmin will meet the state-backed mediator, the Commission for Conciliation, Mediation and Arbitration on March 31. While all parties are “entering settlement territory,” job losses will be “inevitable” to make shafts profitable again, Griffith said.
The companies have offered increases of as much as 9 percent, compared with South Africa’s inflation rate of 5.9 percent as of February. They may be able to reach a settlement of 12,500 rand a month over three years as long as that figure was “total cost to company” and includes housing and benefits, Griffith said. The AMCU wants 12,500 rand a month as a basic wage.
That “is a way for AMCU to go back with some face saving around those scenarios,” Griffith said.
The AMCU’s wage demands would add about 9 billion rand to Amplats’s annual costs and make its Rustenburg and Union operations unsustainable, he said.
“As we stand now Rustenburg cannot make a profit this year,” Griffith said. “At some point in time we’ve got to say to ourselves, ‘Well, at what point in time do we have to shut down Rustenburg?’ That is a conversation we’re having internally. The same goes for Union mine.”
About 7,500 jobs have been eliminated from Amplats’ Rustenburg operations in the past year and more will probably be lost in the longer term as the industry becomes more mechanized, Griffith said. The strike will “accelerate” that process, he said.
South Africa produces about 70 percent of the world’s mined platinum. Amplats was little changed at 470 rand by the close in Johannesburg, keeping the gain since the strike started to 8.8 percent.
The companies have lost 10.5 billion rand of revenue because of the stoppage, while workers have forfeited 4.7 billion rand in wages, the three producers said on a joint website.
Amplats has an agreement with Impala to refine some of the latter’s mined platinum in an example of how to the companies are working together to fulfill customer orders, Griffith said.