August 25, 2009 / 12:00 PM / 10 years ago

UPDATE 3-Strike halts SAfrica platinum group's biggest mine

* Mine producing 1 mln oz/yr halted by strike

* Implats says unaware of reasons for work stoppage

* Union says workers angry at Implats, want higher pay

(Adds fresh Implats, NUM quotes, strike at BHP SAfrica unit)

By James Macharia

JOHANNESBURG, Aug 25 (Reuters) - The world’s No. 2 platinum producer, Impala Platinum, said on Tuesday a strike by workers had halted its largest operations in South Africa, and it was unclear how long the industrial action would last.

The strike by 10,000 workers at Impala Platinum (IMPJ.J) (Implats) ignored a weekend call by the mineworkers’ union to suspend threatened industrial action, and the union leadership said it would try to get the workers to return to work.

The strike will dent Implats’ output, may hurt investor confidence in a sector hard hit by the financial crisis and affect prices of the precious metal used in catalytic converters to remove pollutants from car exhausts, and in jewellery.

South Africa produces four-fifths of the precious metal, and Implats supplies 25 percent of global platinum output mainly from its South African operations and its Zimbabwean mines.

Platinum XPT= rose to $1,240 an ounce at 1540 GMT from $1,236.50 after the company announced news of the strike.

“If Impala and the NUM come to terms on a new contract, some risk premium in the market may be removed and platinum prices could fall further,” HSBC analyst Jim Steel said in a note.

Implats said it was not fully aware why its workers went on strike at its main Rustenburg mine northeast of Johannesburg, but hoped to find out at a meeting with the union on Wednesday.

Police arrested 10 miners for public violence at the mine after they hurled stones at vehicles and set two cars alight, the SAPA news agency reported.

The National Union of Mineworkers (NUM), South Africa’s biggest union, said some members were angry at Implats’ delay in making its latest pay offer, while some wanted an even higher increase.

“We’ll meet with Implats tomorrow to give feedback from our members on their pay offer, but this strike shows some of our members seem to be rejecting it,” NUM spokesman Lesiba Seshoka said.

Implats’ one-year wage agreement with a pay rise of 10 percent for all workers appeared to have met NUM demands, but some members now wanted a 13 percent increase, Seshoka said.

Implats spokesman Bob Gilmour said output would be lost at the mine which produces one million ounces of platinum a year. Refining operations at the facility were ongoing, he said.

“The strike is going on and I think it will go on until we meet with the union to hear what’s behind it,” Gilmour said.

Another round of wage talks between the NUM and Anglo American Plc’s (AAL.L) unit Anglo Platinum (AMSJ.J) (Angloplat), the world’s No. 1 platinum producer, are set for next week. There is no specific threat of a strike from the union there.

Steel said a deal between Impala and the NUM may boost chances for one between Angloplat and the NUM.

INFLATION JITTERS

Above-inflation pay settlements after strikes in other industries and sectors in South Africa, and threats of more stoppages, have added to concerns of inflation pressures, although President Jacob Zuma has said union strike action was nothing more than part of the normal wage negotiations.

Wages take up more than half the costs in South African mining firms, which are faced with lower demand for commodities owing to the global economic downturn and falling metal prices.

The smaller National Union of Metalworkers of South Africa (Numsa) said about 500 of its members would strike indefinitely over wages from Aug. 27 at BHP Billiton’s (BHP.AX)BLT.L South African Meyerton plant — a producer of manganese alloys.

Analysts said pay settlements above inflation — 6.9 percent in June — have led to worries that it could make it harder for companies to make a profit, and to lift Africa’s biggest economy out of its first recession in 17 years.

Cape Town-based portfolio manager Patrice Rassou of Sanlam Investment Management said unions had found strikes a useful tool for extracting higher pay rises from government and companies, based on historic inflation numbers.

South Africa inflation peaked at 13.7 percent in August last year, but has been slowing since then.

“Implats is caught between a rock and a hard place,” Rassou said. “Production is falling and the price of platinum is down. This (wage deal) will put their future earnings under pressure.” (Additional reporting by Agnieszka Flak in Johannesburg and Jan Harvey in London; Editing by Victoria Main)

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