WRAPUP 3-Implats warns of dismissals as SAfrica strike flares

* Union threatens company-wide strike over pay

* Implats says so far strike confined to big mine

* Implats says cannot afford to meet union pay demands

* Zuma says recession has made for hard pay talks

(Adds Zuma comment on Implats)

By James Macharia

JOHANNESBURG, Aug 27 (Reuters) - South Africa's Impala Platinum (IMPJ.J) said on Thursday it could sack thousands of striking workers, escalating a wage dispute that miners threatened to spread to all the company's operations.

Impala Platinum (Implats), the world's No. 2 platinum miner, said it could not bow to union demands for a 14 percent pay rise -- more than double inflation -- after reporting that annual earnings had halved and overall costs rose by more than a third.

"You have to draw a line in the sand," Implats Chief Executive David Brown said. "The strike is reducing output, and cash flow and it puts pressure on the company. We reserve the right to mass dismissals, it is one of the options we have."

South African President Jacob Zuma told a media briefing at parliament in Cape Town that the global recession had made pay talks tougher.

"It's an unfortunate situation certainly," Zuma said of the situation at Implats.

"I think it will be very difficult for people to come to agreements easily and therefore one sympathises with that, and we just hope that they (companies and unions) are able to sail through these difficult waters," he said.

South Africa produces four fifths of the world's platinum and Implats alone supplies 25 percent of the precious metal, mainly from its South African operations and mines in Zimbabwe.

The strike at Implats threatens to hurt investor confidence in a sector hard hit by the financial crisis, but has so far had little effect on the price of the metal used in jewellery and in catalytic converters to cut pollutants from car exhausts.

Platinum XPT= was at $1,229 an ounce from a close of $1,232. Analysts said the strike had failed to affect platinum prices because demand for cars was depressed. A strike would have to be wider and much more sustained to have an impact.

But Implats' shares fell 4.5 percent on the earnings and the strike, Tubby Goodwin, a trader at Investec Securities said.

Brown said the company could not sustain a prolonged strike because it had little inventory of mined ore, and it was costing Implats 3,500 ounces of platinum daily. [ID:nWEA8171]

PROTECTED STRIKE

The National Union of Mineworkers (NUM) said it was not fazed by the threat of sacking workers, because it had served a legal notice on Implats after failure to agree on wages.

"He can't fire them, the strike is protected by law," said NUM spokesman Lesiba Seshoka.

He said workers would continue the strike even though they are not normally paid while taking part in industrial action. The lowest-paid miner at Implats earns about 3,500 rand ($443.9) a month.

The strike could affect all of Implats by Friday, he said.

Brown said the strike was so far confined to its Rustenburg mine -- the company's biggest -- where more than 20,000 workers went on strike on Monday night, but that it was possible the union could carry out a threat of a company-wide strike.

Above-inflation pay settlements after strikes and threats of them in other industries and sectors have led to worries over inflation pressures and the ability of companies to lift Africa's biggest economy out of its first recession in 17 years.

Pay talks broke down after the NUM -- South Africa's biggest union -- rejected Implats' offer of a 10 percent raise, and demanded a 14 percent increase, transport and housing allowances.

Brown said the NUM's demand was not negotiable, citing South African inflation at 6.7 percent.

Impala said earlier on Thursday headline earnings per share fell 52 percent in the year ending June 30, mainly hit by weak metal prices due to falling global demand for cars due to recession. [ID:nLR585115]

Aquarius Platinum (AQP.AX), the world's fourth-largest platinum producer, said it had dismissed 3,900 contract workers at two of its South African mines as a result of "unprotected industrial action". [ID:nWEA8243]

But the threat of a sector-wide strike receded after the NUM said workers at Anglo Platinum (AMSJ.J), the world's largest platinum producer, were likely to accept the group's latest pay deal. [ID:nWEA7995] For more stories on the strike, please click on [ID:nLR649879] (Additional reporting by Serena Chaudhry, Wendell Roelf in Cape Town; Editing by Sue Thomas and Keiron Henderson)