* Strike costs producers more than $2 bln in lost revenue
* Restructuring, job cuts will be next challenge
* Investor focus also on platinum price
* Amplats sees about 2 weeks to resume "meaningful" output
(Adds comments from Amplats CEO)
By Ed Stoddard
MARIKANA, South Africa, June 25 Tens of
thousands of South African platinum miners returned to work on
Wednesday after wage deals ended the longest and most damaging
strike in the country's history.
The five-month strike hit 40 percent of global production of
the precious metal and has cost Lonmin, Anglo American
Platinum and Impala Platinum a combined 24
billion rand ($2.25 billion) in lost revenue.
Industry and union officials said miners were streaming back
to work and Reuters reporters saw thousands trudging to Marikana
before sunrise on a cold winter's morning.
A supervisor at the Marikana operations of London-listed
Lonmin told Reuters it could be a week or more before any
workers went back underground. A return to full production could
still take three months.
Anglo American Platinum (Amplats) CEO Chris Griffiths told
local radio he expected the company to resume "meaningful"
production in about two weeks.
He estimated the world No. 1 platinum producer would end up
losing 11 billion rand ($1.04 billion) due to the strike.
In Marikana, miners cheered the return to work, relieved
after months without pay.
"Viva AMCU! Viva Lonmin!" one worker shouted on his way to a
Lonmin processing plant. Miners in a bus danced and sang in
jubilation as it drove up to the gates.
Lonmin had set up huge canvas tents in a nearby stadium
where miners underwent medical and other checks.
Calling for a "living wage" for its members, many of whom
live in poverty, the Association of Mineworkers and Construction
Union (AMCU) had demanded an immediate doubling of basic wages
to 12,500 rand ($1,200) a month.
In the end, it settled for raises of up to around 20 percent
The companies will find even that increase hard to absorb.
Around half of the country's platinum shafts were losing money
even before the strike.
"We await more detail on a recovery plan but clearly the
company isn't out of the woods yet, with the health of
employees, damage underground from prolonged inactivity,
retraining, etc, etc, all issues to overcome," Investec said in
a note about Lonmin.
Lonmin's share price is down more than 21 percent since Jan.
22, the eve of the strike. Implats has shed about 11 percent
while Amplats is up around 9 percent over the same period.
Yet some analysts caution there could be further impact from
"The market is probably still underestimating the true cost
of the strike on the companies' balance sheet and the cost of
returning operations to production. So until we have got
visibility on that I would remain somewhat cautious," said
Edward Sterck at BMO Capital Markets.
"The focus for investors will be whether we see any upward
movement of the platinum price and also some clarity on what the
true cost of the strike has been," he said.
Amplats' Griffiths said on Wednesday his company would give
an update on the restructuring of its platinum holdings in the
second half of the year. He insisted the three producers had
not, as part of the wage settlement with AMCU, made any
commitments to refrain from restructuring or cutting jobs.
Lonmin has said restructuring was "inevitable" especially
while industrial demand for platinum in vehicle catalytic
converters remains subdued.
Around 1.2 million ounces of production have been lost to
date, according to Reuters calculations based on the companies'
estimated loss of 10,000 ounces a day. The industry usually
works for 11 days out of 14.
Yet the strike had little impact on the spot price of
platinum, underscoring the challenges facing the sector.
Renewed labour strife is also a possibility. AMCU is sure to
oppose any restructuring proposals that include job cuts.
Layoffs are a thorny issue in South Africa, which has an
unemployment rate of close to 25 percent and wide income
disparities. AMCU members have gone on wildcat strikes in the
past to protest at planned job losses at Amplats.
AMCU will also now work to solidify its power base having
poached tens of thousands of members from the once dominant
National Union of Mineworkers in 2012 in a vicious turf war that
has killed dozens of people and looks set to rumble on.
It has signalled it plans to recruit elsewhere, including in
the gold sector where it is the minority union.
($1 = 10.5564 South African Rand)
(Additional reporting by Zandi Shabalala, Tiisetso Motsoeneng
and Xola Potelwa in Johannesburg and Silvia Antonioli in London;
Editing by Ed Cropley, Jason Neely and Pascal Fletcher)