UPDATE 3-Platinum producers to take wage offer direct to striking miners

Thu Apr 24, 2014 4:19pm EDT

Related Topics

* Producers to go directly to striking miners

* AMCU says rebuffed by "platinum cartel"

* Amplats reduces production guidance for 2014

* Painful restructuring seen after strike ends (Updates with AMCU response)

By Ed Stoddard

JOHANNESBURG, April 24 (Reuters) - Major platinum producers in South Africa said on Thursday they would take their latest wage offer directly to employees, after they failed to reach a deal to end a 13-week strike with the Association of Mineworkers and Construction Union (AMCU).

The move marks a dramatic escalation in the longest and most damaging strike in South Africa's mines in living memory, setting the next stage in a grinding war of attrition between capital and labour on the platinum belt.

"(We) advise that, unfortunately, no resolution has yet been achieved in resolving the three-month strike relating to wages and benefit," Anglo American Platinum, Impala Platinum and Lonmin said in a joint statement.

"The producers have a duty to provide the details of the settlement offer to our employees and will do so forthwith."

AMCU said it in a statement it planned to address its members about the unfolding situation in mass meetings, saying it had been "arrogantly rebuffed by the platinum cartel".

"We were extremely livid at these underhanded methods. It is difficult to predict how our members will react and what mandate they will give us faced with this situation," it said.

The producers are forcing the hand of AMCU and its president Joseph Mathunjwa by betting that most of the strikers have lost their resolve to strike as they face the third consecutive month without pay.

The companies can go directly to the workers through a number of avenues including by mobile phone text messages, a method they have been using to communicate with them throughout the strike.

"They will get the offer detail from us. They will be able to consider the offer and indicate to their union whether they are happy to return or not," Implats spokesman Johan Theron told Reuters.

"Failing the above, they will be able to tell us whether they are ready to accept or not. On this basis we could then take a decision to re-open the mine and allow workers to return on the basis that they enter into an individual agreement with the employer," he said.

AMCU for its part will try and rally its rank and file through its trade-mark mass meetings.

There is potential for violence given AMCU's recent history. It emerged as the top union in the platinum shafts in 2012 after poaching tens of thousands of members from the once-unrivalled National Union of Mineworkers (NUM) in a turf war that killed dozens of people.

The union and producers had spent the past three days haggling over an offer tabled last week by the companies.

Underscoring the widening impact of the stoppage, Amplats said it now expected full-year output to be 2.1 million ounces, down from its previous estimate of 2.3 million to 2.4 million.

There is "potential for further downside revisions from the ongoing industrial action", the unit of global mining house Anglo American said in a trading update.

A painful restructuring is considered likely after the dust clears from the strike, with job losses expected, especially around Amplats' struggling Rustenburg operations, which it has signalled it could sell or mothball.

The strike, which started exactly 13 weeks ago, has hit about 40 percent of global production with more than 700,000 ounces lost so far.

MILLION-OUNCE STRIKE

Even if the strike were to end next week, production losses will still mount as the mines slowly reboot.

"Based on the extent of direct losses from strike action to-date, and adding in an allowance for lower production as a result of safe-start procedures, re-hiring, re-training and ramp-ups, I expect losses to platinum production this year to be in the order of 900,000 to 1 million ounces," said William Tankard, metals analyst at Thomson Reuters GFMS.

Exacerbating the industry's woes is the muted price reaction to the stoppage despite its scale. Traders have bet there are adequate above-ground stocks and demand remains far from robust in major markets such as Europe.

Spot platinum prices are near $1,400 an ounce, around 3.5 percent lower than just before the walkout began on Jan. 23.

The sector's viability is also being shaken. Producers have lost 14.5 billion rand ($1.4 billion) to the strike so far, according to an industry website that gives a running tally (here).

These factors plus rising costs explain why the producers have been trying to draw a line in the sand, setting the stage for a protracted showdown.

Mathunjwa has cast the strike in class-war terms and says his union aims to rectify decades of exploitation of black labour by white capital.

Initially demanding an immediate doubling of the basic wage - net salary before allowances such as housing - for entry-level workers to 12,500 rand a month, AMCU has since said it would accept annual increases that would reach this goal in three or even four years' time.

The producers' latest offer, made last Thursday, was for wage rises of up to 10 percent and other increases that would take the minimum pay package - the basic wage including the allowances - to 12,500 rand a month by July 2017. (Editing by David Evans and Keiron Henderson)

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