South Africa's strike-hit Implats says violence is 'devastating'

Reuters News
Posted: May 16, 2014 8:55 AM

By Ed Stoddard

JOHANNESBURG (Reuters) - Impala Platinum described on Friday as "devastating" the impact on its employees of a 16-week strike at its main South African operation in Rustenburg and said it had lost more than $500 million in revenue.

The company signaled it expects the strike to drag on.

"The human tragedy that is unfolding as a result of our employees not earning any income and the violence and intimidation being experienced on the platinum belt is devastating," it said in its third-quarter production report.

The strike is centered on the platinum belt town of Rustenburg northwest of Johannesburg and Implats said the reopening of its mine there "will only be considered when the risk of violence and intimidation can be eliminated".

"The resumption of normalized production levels at Impala Rustenburg, once the strike ends and operations resume, are expected to take at least three months to achieve," it said.

"Consequently, no further production is expected from this operation in the final quarter of FY2014."

Anglo American Platinum and Lonmin have also been hit by the wage strike by the Association of Mineworkers and Construction Union (AMCU) and their attempts to woo workers back have been met this week by violence.

Four miners were killed last weekend and rival unions have said intimidation has been on the rise as the companies take their latest wage offer directly to employees after talks collapsed in late April.

Acts of violence have continued. Police said on Friday that a Lonmin employee had been attacked by four men with clubs in the early hours of the morning as he attempted to show up for work. The victim suffered multiple injuries to his head.

AMCU denies allegations it uses violence to keep its roughly 70,000 members on the platinum mines in line.

In the three months to the end of March, Implats said it had produced 205,000 ounces of gross refined platinum, 41 percent lower than the comparable period in 2013.

Underscoring the widening impact of the strike, the longest and costliest ever to hit South Africa's mines, Implats said to date it had lost "246,000 ounces of platinum production, equivalent to revenue of 5.4 billion rand ($520 million)".

The company's employees have lost 1.4 billion rand ($134.75 million) in wages, it said.


Given these financial circumstances, the company said: "No increases have been granted to management for the year and the CEO has not accepted any increases, bonuses and share options since having joined the company in July 2012."

This is unlikely to impress AMCU, whose leaders often talk about the plight of black mine workers and the income disparities they say still run mostly along racial lines in the industry two decades after the end of apartheid rule.

According to Implats' 2013 annual report, chief executive Terence Goodlace's remuneration for the last financial year was around 7.5 million rand.

This is hardly excessive by the standards of the local mining industry but is still around 80 times that of the total pay package of the lowest-paid mine workers.

The companies have offered pay hikes of up to 10 percent that would raise the overall minimum pay package to 12,500 rand ($1,200) a month by July 2017, including the basic wage plus cash allowances for things like housing.

They say they can afford no more, squeezed on one side by soaring costs and the other by low prices for the precious metal used in emissions-capping catalytic converters in automobiles.

AMCU, whose battle cry has been for "a living wage", has said that is not enough and has focused the attention of its members on the basic wage which excludes allowances.

The union initially demanded an immediate increase to 12,500 rand in just the basic wage but softened that in March to staggered increases that would amount to 12,500 rand within three or four years.

This is still a third more at the end of the day than what the companies are offering in basic salaries.

The average South African mine worker has eight dependants and so even though the industry has had wage settlements over the past decade that exceed inflation, such increases often fail to go far in households with many mouths to feed.

This fuels their demands but will also make it increasingly difficult for AMCU's members to continue to go without pay.

The companies say most workers have indicated by mobile phone text messages and other means that they want to accept the latest wage offer and that only a campaign of intimidation is preventing the reopening of the affected mines.

($1 = 10.3892 South African Rand)

(Editing by Olivia Kumwenda-Mtambo and Susan Thomas)