Platinum Producers, Union Said to Remain Divided in Talks

Platinum producers and the South African union whose four-month strike has crippled their mines remain divided in talks to resolve the standoff, according to two people familiar with the negotiations.

Prospects for a resolution are weaker than they were yesterday, after the union sought changes to the latest government-brokered proposal, one of the people said, asking not to be identified as the discussions are private.

Minister of Mineral Resources Ngoako Ramatlhodi is coordinating talks between Anglo American Platinum Ltd., Lonmin Plc and Impala Platinum Holdings Ltd. and the Association of Mineworkers and Construction Union, which continue tomorrow. A strike by more than 70,000 AMCU members at the world’s three biggest producers has paralyzed mines since Jan. 23 and caused the economy to contract in the first quarter.

Union members are on strike over a demand for basic monthly pay excluding benefits for entry-level underground employees to be more than doubled to 12,500 rand ($1,168) by 2017. The producers have said increases of that order would cost too much.

“There is no concession, it’s 12,500,” AMCU President Joseph Mathunjwa told reporters in Johannesburg today. “I think AMCU has been steadfast on 12,500. We moved from one year to four years, so therefore it’s up to the companies to say, ‘now it’s time to share the minerals of this country.’” There is no argument “that stands” explaining why the companies can’t afford the demands, he said.

Economic Blow

The union and the employers remain far apart, the second person familiar with the talks said. The union accepted part of the proposals made by the minister and sought some changes and further concessions, the person said.

Amplats, as the world’s largest producer is known, fell 1.3 percent to 467.50 rand by the close in Johannesburg. Impala, the second-biggest, fell 1.2 percent to 111.36 rand. Lonmin rose 0.7 percent to 254.90 pence in London.

Ramatlhodi met with chief executive officers from the platinum producers in Pretoria yesterday, where a proposal from the union was presented, the Department of Mineral Resources said in a statement. The companies held talks with the government team today that will continue tomorrow, Mahlodi Muofhe, a spokesman for the department, said by phone.

A wage deal discussed in the negotiations last week would benefit lowest-paid workers the most, according to two people familiar with the talks. Those earning the least would receive an increase of 800 rand a month every year for five years, people with knowledge of the matter said June 3.

Lost Wages

South Africa’s economy contracted in the first quarter for the first time since a 2009 recession as the walkout caused mining production to plunge by the most in 47 years. The companies say the strike has cost them 21 billion rand in lost revenue, while workers have forgone more than 9 billion rand in wages.

Inflation was 6.1 percent in April. The last offer made public by producers amounted to increases of as much as 10 percent a year.

A labor court today started hearing arguments on whether the AMCU should be allowed to strike at South African gold mines. AngloGold Ashanti Ltd., Sibanye Gold Ltd. and Harmony Gold Mining Co. agreed in September to an 8 percent increase in wages with the National Union of Mineworkers.

While the NUM is the largest union among gold workers, the AMCU is dominant at some of the biggest South African mines, including AngloGold’s Mponeng, Harmony’s Kusasalethu and Sibanye’s Driefontein.

The companies said the pay settlement applied to all workers. The case at the labor court in Johannesburg continues tomorrow.

A strike at the gold producers would be “devastating and we definitely wouldn’t be able to sustain a strike action of the period now that we are looking at in platinum,” Elize Strydom, chief negotiator for the Chamber of Mines, told reporters outside the court room.

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