* Reboot process frought with difficulty -Harmony Gold CEO
* Amplats says has reached 60 pct of pre-strike output
* Implats making "reasonable progress"
* Lonmin rows back on original target
By Ed Stoddard
JOHANNESBURG, Aug 14 The experience of Harmony
Gold provides a stark warning for investors and metals
traders banking on South Africa's platinum sector making a swift
recovery from the crippling five-month strike that ended in
The world's top three platinimum producers, Anglo American
Platinum (Amplats), Impala Platinum (Implats)
and Lonmin, boldly predicted in June that it would take
three months to restore production to pre-strike levels.
However, Harmony's trials and tribulations in the 18 months
since reopening its Kusasalethu mine, which was shut down for
three months because of union violence, suggest that the
platinum trio's estimates were wildly optimistic.
Talking to reporters on Thursday, Harmony Chief Executive
Graham Briggs said that Kusasalethu is still falling short of
the quarterly 1,500kg to 1,600kg of bullion it was producing
before the conflict forced its closure.
Harmony's protracted restart illustrates the unexpected
consequences of the fraught labour environment in South Africa's
mining sector, which is rooted in a vicious turf war between the
once-dominant National Union of Mineworkers (NUM) and the
Association of Mineworkers and Construction Union (AMCU).
Briggs said that merely getting a large mine up and running
after a long shutdown is a complex process in which things can
and will go wrong.
CONTINUUM OF EXCUSES
"You get back to work and it takes you three months to get
people in the right place, the training done again, safety
checks, health checks and everything," he said.
"You haven't been doing all the maintenance on the pump
because the pump hasn't been working. So now the pump breaks
down. So there is this continuum of excuses."
Briggs said that a peak of sorts is then reached, making it
difficult to push productivity back to pre-stoppage levels.
"You get up to a plateau of 50 or 60 percent and then you
have to do something completely different. Once you have been
producing for three or six months at a certain level, then
everyone gets used to it," he said.
Kusasalethu has now reached production levels of more than
1,300kg a quarter, but Briggs said it would take another two
quarters to reach 1,500kg to 1,600kg - a full two years after
the mine west of Johannesburg was closed.
Platinum industry executives also say the biggest challenge
in hitting former production levels kicks in when you reach the
A senior Amplats' executive said the company was back to
about 60 percent of its pre-strike output "but the hard part
will be getting back to 100 percent".
Implats spokesman Johan Theron said that it is an "enormous
undertaking" to restart these huge mines and that the company's
guidance has been that it would take at least three months to
"We are making reasonable progress, but the last bit is
always going to be the most difficult," he said. "To go from
zero to 50 percent is easier than going from 50 to 100 percent."
There are also festering personal issues between NUM and
AMCU members, which constrain productivity.
"I would think it would take at least six to nine months in
platinum, not least because of all the safety checks they have
to make and the tens of thousands of guys they have to get
back," one mining analyst said.
Lonmin has already rowed back a little from the original
targets set in June, saying that it expects to be at 80 percent
of normal production levels by September.
For the country as a whole, meanwhile, getting the platinum
mines running at full capacity is crucial.
Data on Thursday showed that South Africa's production of
platinum group metals fell 37 percent in the year to June,
robbing Africa's most advanced economy of a key export that
brings in hard currency.
The five-month wage strike took 1.2 million ounces of
platinum out of production, close to 20 percent of annual global
output, and cost the companies more than $2.5 billion in
Employees lost more than $1 billion in wages and the economy
shrank in the first quarter, largely because of the strike.
Amplats now wants to sell several of its mines - a task that
will be made harder if they are not running at full capacity.
All these factors make the stakes in the platinum belt much
higher than they are at Kusasalethu, where the long slog back
bodes ill for the journey Amplats, Implats and Lonmin are now
(Editing by David Goodman)