April 23, 2014 / 6:21 PM / in 4 years

UPDATE 1-South Africa platinum strike talks to continue Thursday

* Strike has cost industry $1.4 bln in lost revenue

* Platinum price remains depressed despite strike

* Miners get ready for mass meeting - AMCU official (Updates with end of talks)

By Ed Stoddard

JOHANNESBURG, April 23 (Reuters) - Marathon talks aimed at ending a crippling three-month strike in South Africa’s platinum sector will resume on Thursday after the world’s top producers and union AMCU spent two days haggling over an offer tabled last week by the companies.

The strike is already the longest and most costly in living memory for South Africa’s mines, though there has been a renewed drive to break the deadlock in recent days after several weeks with no formal direct talks between the two sides.

“They have adjourned and will meet again tomorrow,” an industry source told Reuters. The talks involve the Association of Mineworkers and Construction Union (AMCU) leadership and chief executives from Anglo American Platinum, Impala Platinum and Lonmin .

No talks had been scheduled beyond Wednesday, so the reappearance of both sides at the negotiating table on Thursday could be viewed as a sign of progress. But neither AMCU officials nor the producers would comment on the discussions.

About 70,000 members of the hardline AMCU downed tools 13 weeks ago, hitting 40 percent of global production of the metal used for emissions-capping catalytic converters in cars.

Initially demanding an immediate doubling of the basic wage - net salary before allowances such as housing - for entry-level workers to 12,500 rand ($1,200) 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.

The companies are struggling to maintain margins in the face of steeply rising costs on one hand and depressed platinum prices on the other and say they cannot afford any more.


A painful restructuring is considered likely after the dust clears from the strike, with job losses expected, especially around Amplats’s struggling Rustenburg operations.

Even if AMCU brings an offer to its members, the strike will not end until votes are taken at mass meetings in the platinum belt northwest of Johannesburg. This process could take days and there is no guarantee an offer would be accepted.

“We have been told to prepare for a central mass meeting this week. It may take place on Saturday,” Siphamandla Makhanya, an AMCU shop steward, told Reuters.

That may involve bringing thousands of miners back from their rural homes in places such as the Eastern Cape province hundreds of kilometres from the shafts. Many have returned to their villages and families to sit out the strike.

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 about $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 14.4 billion rand ($1.4 billion) to the strike so far, according to an industry website that gives a running tally (here). ($1 = 10.5448 South African rand) (Additional reporting by Zandi Shabalala; Editing by Louise Ireland and David Goodman)

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