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South Africa platinum miners face more labor militancy
July 23, 2012 / 2:27 PM / 5 years ago

South Africa platinum miners face more labor militancy

JOHANNESBURG (Reuters) - Anglo American Platinum (Amplats) (AMSJ.J), the world’s top platinum producer, signaled on Monday it plans to trim loss-making shafts as producers of the metal grapple with depressed prices and a rise in union militancy.

Amplats, an Anglo American (AAL.L) unit which unveiled interim results that as expected showed an almost 80 percent fall in earnings, confirmed it experienced a brief strike last week around its Rustenburg operations as inter-union rivalry spreads through the platinum belt.

Acting Chief Executive Bongani Nqwababa told Reuters the strike was limited and was related to recruiting, but said Amplats did not yet recognize the upstart Association of Mineworkers and Construction Union (AMCU) which is locked in a turf war with the dominant National Union of Mineworkers (NUM).

Nqwababa, who stepped in last Thursday when Neville Nicolau stood down after the company flagged its earnings fall, said in a results presentation he would not “tolerate unprofitable ounces”, a clear a signal the group could move to close loss-making shafts - a situation sure to spark more labor strife.

Separately Aquarius Platinum AQPJ.J warned of a winter of labor discontent in coming months.

“Unfortunately, the likelihood of industrial action over the South African winter is high, largely as a result of inter-union rivalries,” Aquarius said in a production update.

The company also said it had been hit by “intermittent unlawful industrial action” at one of four shafts at its Kroondal operation in July.


Industrial action in South Africa this year has often been caused by workers switching allegiance to AMCU from the NUM and then embarking on illegal strikes for better wages. Such action earlier this year lead to a six-week shutdown of the world’s largest platinum mine, run by Impala Platinum (IMPJ.J).

Sources close to AMCU told Reuters the action last week was sparked by workers seeking to quit the NUM to join AMCU.

The stakes are high in the industry and the economy as a whole, as food price pressures begin eating into the household incomes of lower-wage workers, a scenario that will push wage demands higher at a time when South Africa’s platinum sector is barely profitable.

The platinum market was not impressed by the possibility of production cuts, with the spot price trading 1.2 percent lower at $1,387.00 an ounce. Global demand for the key metal used to make emissions-cutting catalytic converters in automobiles has been stubbornly weak.

Amplats cut its 2012 production target slightly to between 2.4 and 2.5 million ounces and said this would likely be its output level for up to three years.

“We anticipate that this would leave the market in balance, increasing the chance of a deficit, which should increase prices,” Nqwababa said. Anglo is reviewing its operations.

Aquarius, which has put two of its operations on “care and maintenance” - industry speak for a temporary closure of production - said it hoped others would follow suit.

Aquarius shares were down almost 7 percent in London after earlier hitting a 12-year low, while Amplats was down almost 4 percent in Johannesburg.

Editing by David Holmes

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