MARIKANA South Africa (Reuters) - 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 annually.
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 walkout.
“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