Platinum-Strike Union Gains Foothold at Biggest Kumba Mine

The union whose strike has paralyzed the world’s largest platinum mines is set to win recognition at Kumba Iron Ore Ltd., operator of Africa’s biggest production site for the steelmaking raw material.

The Association of Mineworkers and Construction has applied for official status at Kumba’s Sishen mine, Norman Mbazima, chief executive officer of the Anglo American Plc unit, said today. More than 70,000 AMCU members have been on strike over pay demands at Anglo American Platinum Ltd., Impala Platinum Holdings and Lonmin Plc since Jan. 23.

“We’ve looked at the members that they have and we think that they will qualify for recognition, but will not qualify in the short term for bargaining rights,” Mbazima said on a conference call. The National Union of Mineworkers is the largest at Kumba, representing about 48 percent of employees, while the AMCU speaks for about 5.2 percent, Mbazima said.

The union’s voice at Kumba operations is growing as the Pretoria-based ore producer prepares for a new wage deal with labor groups that must be completed this year, to replace the 2012 agreement with the NUM and Solidarity organizations. Platinum producers are losing about $18 million a day in sales because of the strike led by the AMCU, which unseated the NUM as the largest at the companies in the past 18 months.

Sishen Expansion

Kumba received a boost today when it gained the rights to mine a strip of land 14 kilometers (8.7 miles) long and 30 meters wide, previously used by state-owned rail operator Transnet SOC Ltd. Kumba will start work on the new land, which covers about 33 percent of the Sishen ore reserves, in the second half of 2014, it said in a statement.

It will cost Kumba about 4.2 billion rand ($381 million) to move a community of about 3,000 people who are currently living on the land, the company said.

“The biggest part of this is construction and that’s what we know how to do,” Mbazima said in an interview. “We know how to build houses, we know how to deal with infrastructure.”

The relocation process will take three years to complete, Mbazima said.

Kumba also said today 2013 profit increased 24 percent as iron-ore prices climbed and the South African rand fell. Net income excluding one-time items advanced to 15.4 billion rand, or 48.08 rand a share. The median estimate of analysts surveyed by Bloomberg was for profit of 47.96 rand a share.

Output Decline

Iron-ore production fell 2 percent to 42.4 million metric tons as constraints hindered output at Sishen, where volumes dropped 8 percent. This was partially offset by a 27 percent increase in output at the Kolomela mine to 10.8 million tons.

Kumba receives payment in dollars for its iron-ore exports from South Africa, where it has all its producing assets. The rand depreciated 19 percent against the dollar in 2013, making it the worst performer among 16 major currencies tracked by Bloomberg.

Benchmark ore with 62 percent iron content delivered to the Chinese port of Tianjin traded at an average of about $135 a dry ton in 2013, 5.5 percent more than in 2012, according to The Steel Index. Prices may weaken later this year, Kumba said.

“The supply-demand balance will shift in the second half of 2014 due to more supply from Australia and Brazil, and slowing demand growth,” it said. “This is expected to put some pressure on the iron-ore price in the second half of 2014.”

Kumba declared a final dividend of 19.94 rand a share, raising its total payout for the year by 26 percent to 40.04 rand a share.

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