Anglo Says Platinum Pay Fight Inevitable on Productivity

Anglo American Plc’s four-month battle with a labor union at its South African platinum mines was inevitable because the demands by workers are too costly, Chief Executive Officer Mark Cutifani said.

“What’s being asked, for us is unsustainable,” Cutifani said yesterday in a speech in London. “And at the same time, the productivity in the platinum sector is one tenth the productivity in the Australian mining sector and we are paying one fifth of the wages.”

Anglo controls the world’s largest platinum producer, which has been disrupted by a strike since January. The Association of Mineworkers and Construction Union has called more than 70,000 miners out, including employees at Anglo American Platinum Ltd. Government-led talks to try an end the impasse resume June 9.

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.

“This is one of those challenges we have to take on as an industry, as a company and as a country,” Cutifani, a 56-year-old Australian, said at an event organized by the Melbourne Mining Club in the U.K. capital. “I’m comfortable we’ll get there, but it does need us to stand our ground and be constructive and find a solution to work in the long term.”

‘Sensitive Stage’

Minister of Mineral Resources Ngoako Ramatlhodi is coordinating talks with the employers and producers in an effort to end the walkout and curb further harm to the economy. The minister today oversaw a third day of discussions with Anglo American Platinum, Lonmin Plc and Impala Platinum Holdings Ltd. in the capital, Pretoria.

The deliberations are “at a sensitive stage” and will continue next week, Ramatlhodi said in a statement.

The AMCU sought changes earlier this week to a government-brokered proposal on wages, two people familiar with the negotiations said yesterday.

“I really hope to get a call from the minister” after Ramatlhodi’s meeting with the producers, Mathunjwa said today by phone. The union has made “no concession” on its demands, he told reporters in Johannesburg yesterday.

South Africa’s economy contracted in the first quarter for the first time since a 2009 recession as the strike caused the biggest plunge in mining production in almost half a century. The three platinum companies say they have lost 21 billion rand in revenue since the walkout began and that workers have given up 9.5 billion rand in wages.

“We’re standing in the middle of the toughest platinum fight that South Africa has ever seen,” Cutifani said. “But at the end of the day, it’s the fight that had to be had.”

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