Platinum’s Biggest Mine to Stay Closed for Months on Strike

Production at the world’s largest platinum mine will be paralyzed until at least the middle of the year even if a work stoppage by the dominant union at the operation is resolved soon, Impala Platinum Holdings Ltd. said.

Resuming normal production at the Impala mine near Rustenburg will take at least three months once operations restart, the company said today in a statement. Impala wrote off the prospect of any output from the mine during its fiscal fourth quarter, which ends June 30.

About 70,000 workers who are members of the Association of Mineworkers and Construction Union have been on strike at most South African operations of the world’s three largest platinum producers since Jan. 23, seeking wage increases that the companies say they can’t afford. Four people died in violent attacks during the past week.

“The human tragedy that is unfolding as a result of our employees not earning any income and the violence and intimidation being experienced on the platinum belt is devastating,” Chief Executive Officer Terence Goodlace said in the statement. “Implats urges AMCU to moderate their demands and accept the fair wage offer.”

The AMCU wants basic monthly pay, without benefits, to be more than doubled for entry-level underground employees to 12,500 rand ($1,201) by 2017, while producers are including cash allowances in that figure.

Output Losses

Impala, the world’s second-biggest platinum producer, has lost about 246,000 ounces of production of the metal since the strike started, equivalent to revenue of 5.4 billion rand, while employees forfeited 1.4 billion rand in wages, it said.

Group platinum output declined 40 percent to 205,000 ounces in the company’s third quarter that ended March 31 from a year earlier, largely due to strike-related losses of 131,000 ounces at Impala Rustenburg, it said. Production from Impala’s other mining operations in South Africa and Zimbabwe, accounting for about 45 percent of total capacity, remained unaffected by the strike, it said.

Impala forecasts group sales of 1.2 million ounces for the year that ends June 30, including 150,000 ounces drawn from metal inventories. “No further excess stocks” will be immediately available, it said.

Price Drop

Prices achieved for the metal used in catalytic converters that reduce harmful carbon emissions from vehicles dropped 15 percent to $1,400 an ounce in the period from a year earlier. The group curtailed operating costs and capital expenditure by 67 percent as it applied a “no-work no-pay” principle on salaries and spent less on projects.

The strike at Anglo American Platinum Ltd., Impala and Lonmin Plc will have a “profound” effect on South Africa’s exports, delaying a contraction of the deficit on the country’s current account, Kristin Lindow, a senior vice-president at Moody’s Investors Service, said in an interview in Cape Town today.

Impala’s Rustenburg mine remains closed after leave for non-striking employees was extended until at least May 25, Johan Theron, a spokesman for the company, said yesterday by phone. Entrances used to clock in employees for work at five shafts were empty today as about a dozen workers milled around outside a hostel by Impala’s No. 6 shaft ahead of a meeting with union officials.

Lonmin Plc, the third-largest producer, on May 14 started preparations to resume mining in a bid to break the strike that halted all its operations.

“People are reporting for work; we’ve seen another peaceful night,” Happy Nkhoma, a spokesman for the company, said today, declining to provide attendance figures.

Police received no reports of violent incidents in the platinum belt last night and this morning, South Africa Police Service spokesman Thulani Ngubane said by phone.

Attendance at Anglo American Platinum’s strike-affected mines was improving slowly, company spokeswoman Mpumi Sithole said by phone.

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