June 23 (Bloomberg) -- Miners at the world’s three largest platinum companies agreed to end a crippling five-month strike as Association of Mineworkers and Construction Union members accepted the latest offer from South African producers.
“Today the members of AMCU officially terminated the strike,” union President Joseph Mathunjwa told reporters after a mass rally attended by thousands of miners. “They have to sign the agreement tomorrow and workers, our members, will start reporting back to work on Wednesday.”
Thousands of workers shouted out their approval for the offer from Anglo American Platinum Ltd., Impala Platinum Holdings Ltd. and Lonmin Plc at the Royal Bafokeng stadium in Rustenburg, 120 kilometers (75 miles) northwest of Johannesburg.
The stoppage by at least 70,000 miners cost the companies 23.9 billion rand ($2.2 billion) in revenue and workers 10.6 billion rand in wages since Jan. 23, according to the producers. The deadlock in the nation that accounts for about 70 percent of platinum mined globally pushed its economy into contraction in the first three months of 2014.
“Basic salaries have gone up and even your working over time has improved,” Mathunjwa said. Workers in the stadium answered “yes” when the union leader asked three times whether they accepted the companies’ proposal.
Lonmin gained after rally outcome, closing 4.5 percent higher in London at 259.6 pence. Impala was 1.1 percent higher at 114.25 rand by the close in Johannesburg while Amplats, as Anglo Platinum is known, gained 1.6 percent to 498 rand, the highest since May 6.
Palladium for immediate delivery declined 1.2 percent to $812.25 an ounce while platinum, used to make jewelry and devices that reduce harmful emissions from vehicles, weakened 1 percent to $1,442.87 an ounce.
South Africa’s credit rating was cut on June 13 to one level above junk by Standard & Poor’s, which cited the country’s longest and costliest mining strike as among reasons for the assessment. The rand strengthened 0.7 percent to 10.57 rand against the dollar after the union’s meeting.
Most of the union’s demands were met, Mathunjwa told reporters after the meeting. “Others are process issues,” he said.“It was not an easy ride this.”
The deal includes annual increases of 1,000 rand a month for the lowest-paid underground workers for the first two years of the agreement and 950 rand in the third year, Mathunjwa said at the stadium. The increases are on current pay of about 5,000 rand to 6,000 rand a month. South Africa’s inflation rate was 6.6 percent in May.
The companies agreed to implement the wage gains over three years, and the deal will be applied from July last year at Amplats and Impala and from October at Lonmin. Workers won’t receive back-dated payments for the period they’ve been on strike, Mathunjwa said.
Lonmin has agreed to reinstate 236 workers who lost their jobs, he told members. Anglo American Platinum workers will get food parcels and vitamins in their first month back at work, he said.
The AMCU’s original demand was that basic monthly wages of the lowest-paid workers be more than doubled to 12,500 rand. The union then relaxed the date by which this could be reached. Some workers will be earning this figure within three years, Mathunjwa said at today’s rally.
Possible job cuts will remain “a challenge” for the union, he said.
Before the union leader addressed the crowd, AMCU members marched around the stadium’s track, singing as they went. A man in the group held up a sign reading “rest in peace NUM,” referring to the National Union of Mineworkers, which the AMCU displaced as the biggest representative of platinum employees. The miners also held up a coffin painted red and bearing a NUM sticker.
Mines Minister Ngoako Ramatlhodi said he was glad the parties had reached an agreement. “We obviously, together with the country, breathe a sigh of relief,” Ramatlhodi said on Johannesburg-based radio station SAfm.
Chamber of Mines Chief Negotiator Elize Strydom said the industry group was pleased at the outcome, for producers and miners.
“The hard work starts now,” Strydom said on Johannesburg-based Talk Radio 702. “It’s going to take time for production to get to levels prior to the strike. I think we are still going to have to do a lot of work to convince the world and investors that platinum is a good commodity to invest in.”
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