Companies that buy operations put up for sale by Anglo American Platinum Ltd. after a pay strike by South African mineworkers will need to coexist with labor unions rather than mechanize the operations, said the chief executive officer of Shanduka Group, which owns stakes in platinum mines.
Anglo American Platinum, the Johannesburg-based unit of Anglo known as Amplats, said last month that it will sacrifice its status as the world’s biggest producer of the precious metal by seeking buyers for four mines and possibly stakes in two joint ventures after first-half profit fell 88 percent because of a five-month strike. The company employed almost 50,000 people at the end of last year, according to data compiled by Bloomberg.
South African mines are labor-intensive, a legacy of the apartheid system that ended in 1994. The whites-only government based its economy on using cheap black labor to mine the world’s biggest gold and platinum deposits. To end the strike, Amplats, Impala Platinum Holdings Ltd. and Lonmin Plc were forced to agree to above-inflation pay increases that they said they couldn’t afford. Impala has said it may mechanize a future development to reduce its labor costs.
“Going the mechanized route is an aggressive approach,” Phuti Mahanyele, the CEO of Shanduka, said in an interview at the U.S.-Africa Business Forum in Washington yesterday. “We have to find ways to work with labor.”
Shanduka, the company founded by South African Deputy President Cyril Ramaphosa, owns an 18 percent stake in Lonmin’s platinum mines in South Africa, which produces three quarters of the world’s platinum.
“I certainly do think we will see interest from local companies,” Mahanyele said of Amplats’ sale plans. “We are on the verge of seeing some changes.”
She declined to say whether Shanduka was interested in more platinum assets.
Lonmin shares rose 2 percent to 225.1 pence in London.
The U.S.-Africa Business Forum is hosted by Bloomberg Philanthropies and the U.S. Commerce Department. Bloomberg Philanthropies is led by Michael Bloomberg, the founder and majority owner of Bloomberg LP, the parent of Bloomberg News.