Platinum Union, Producers Mull Proposal to End Strike

The three biggest platinum producers and the main union at their South African operations will consider proposals by the mines minister to end a more than 18-week strike that’s crippled output and shrunk the economy.

Mineral Resources Minister Ngoako Ramatlhodi last week brokered talks between Anglo American Platinum Ltd., Impala Platinum Holdings Ltd., Lonmin Plc and the Association of Mineworkers and Construction Union to try end a strike over pay by more than 70,000 employees that started on Jan. 23.

“We are definitely close, very close” to a solution, Ramatlhodi told SABC News today. “We’ll get feedback this afternoon and if it requires more work, we’ll get the job done. We have no time to waste, we can’t afford another day longer.” The parties hadn’t yet responded by 5:10 p.m., his spokesman, Mahlodi Muofhe, said by phone.

The stoppage by workers in the country with the biggest reserves of the metal has cost the producers 20.6 billion rand ($1.9 billion) in revenue in the industry’s longest and costliest strike. It has cut mining’s contribution to the economy by the most in 47 years in the first quarter, resulting in the first contraction in gross domestic product since a 2009 recession, Statistics South Africa said last week.

Wage Offer

The three producers are considering raising their wage offer, Johannesburg-based Beeld newspaper reported, without saying how it got the information. They may propose to increase monthly wages by 800 rand, or as much as 16 percent a year until 2017 to end the strike, it said. They’re currently offering raises of as much as 10 percent annually.

The AMCU wants basic monthly pay excluding benefits for entry-level underground employees to be more than doubled to 12,500 rand by 2017. South African inflation was 6.1 percent in April.

“The potential for the country to go into recession is a possibility,” said Mark Rosenberg, Africa director at Eurasia Group in New York, said in a May 30 phone interview. “The fact that the GDP number came out is probably the most important driver” in the government’s involvement, he said.

Ramatlhodi was sworn in last week after the nation’s May 7 general election, which was won by the African National Congress party. He put together a team with representatives from the National Treasury and the Labor Ministry to resolve the standoff over wages.

Government Involvement

“I think it’s great to see this process,” Hanre Rossouw, commodities chief for frontier and emerging markets at Investec Asset Management, said May 30. The government’s preoccupation with the elections limited earlier intervention, he said.

The situation may not be any different for the minister than it was for his predecessor, Susan Shabangu, according to Peter Attard Montalto, an emerging-markets strategist at Nomura International Plc in London.

“I don’t see Ramatlhodi being able to do anything different to Susan if he sticks with the standard tool kit; all he is doing is classic ANC engagement,” he said.

The union asked the nation’s labor court to prevent Anglo American Platinum and Impala from communicating details of the wage offer directly to workers through text message.

The matter was struck off the labor court roll today as the union was unable to prove that the matter was urgent, AMCU lawyer Jayson Kent told reporters in Johannesburg.

The “harm” caused by direct communication “is ongoing,” resulting in union divisions, he said.

The Alternative Information & Development Center, a group providing technical support to the AMCU, said the top three producers were selling platinum group metals below market prices, curbing their ability to pay higher wages.

“AIDC is putting findings in the public domain with the intention to engage in a public debate,” Brian Ashley, director of the group, said after a press conference in Johannesburg.

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