Lonmin pay dispute tees up sector-wide South African platinum strike

Reuters News
Posted: Oct 31, 2013 10:38 AM

By Ed Stoddard

JOHANNESBURG (Reuters) - The hardline AMCU union declared a wage dispute with mining company Lonmin on Thursday, raising the possibility of a strike across South Africa's platinum industry that could hit half of global output.

The Association of Mineworkers and Construction Union (AMCU) would stay in talks with the world's third largest platinum producer, but if no progress was made a government mediator would try to resolve the deadlock, AMCU spokesman Jimmy Gama said.

A pay strike across the platinum belt of Africa's biggest economy is looming after AMCU said on Monday its members had voted to down tools at Impala Platinum. It has not yet given formal notice of the stoppage as the law requires.

In addition, AMCU has declared a wage dispute with the world's top producer, Anglo American Platinum.

The stakes are high for AMCU, a growing force in South African labor, as it tees up Amplats, Implats and Lonmin for what could be a single strike across the platinum sector.

"If our disputes with them remain ... we may strike against them at the same time," Gama said.

Coordinated strike action across the three mining companies could take out 60,000 ounces a week of platinum production, or even more if Amplats' joint-venture operations are affected, out of about 120,000 ounces a week of worldwide output.

On the platinum belt, AMCU is king, having wrested tens of thousands of members from the rival, longer established National Union of Mineworkers (NUM) last year in a vicious turf war which killed dozens and sparked a wave of wildcat strikes.

Gama also said AMCU members in the gold sector were voting on possible strike action over wages from next week. "If they give us the mandate we will call the strike," he said.

The union's members are unhappy with deals already inked in the gold sector between producers and the NUM, which companies have implemented for all workers, whatever their union.

AMCU is the minority union in the gold industry but has strong representation at key operations, including Mponeng, the world's deepest mine run by AngloGold Ashanti, as well as at shafts of Harmony Gold and Sibanye.

A fresh wave of strikes in the mines would deal a hard blow to investor confidence in South Africa which has already been hit this year by a spate of labor stoppages. Last year's mines turmoil dented growth and led to sovereign credit downgrades.


A platinum strike could entrench AMCU's power base at a time when NUM, a key ally of President Jacob Zuma's governing African National Congress (ANC), has signaled it wants to regain miners' support ahead of national elections next year.

Members of both unions are still regularly being killed in gangland-style killings in shanty towns that ring the mines.

For AMCU, the ultimate goal of a "Big Three" strike would be the harmonization of wages for its members in an industry where pay has varied between companies.

"They are mining the same commodity and under the same conditions and the platinum price is the same. We see no reason why they should pay them different salaries," Gama said.

Getting the same pay across the board would show AMCU's rank and file it can deliver on its wage promises. A collective wage agreement makes it harder for rival unions to claim they can get better deals for workers.

"There is no collective bargaining framework in platinum but now AMCU is creating a virtual one. This will allow it to lock in power because it will effectively deny access to smaller unions," political analyst Nic Borain told Reuters.

From its position of strength, AMCU has in recent months embraced the legal processes governing wage talks, a stark contrast to last year when its activists embarked on illegal strikes and marched brandishing spears, clubs and knives.

The platinum companies have been offering wage rises of around 7 to 8 percent and say they can afford little more. AMCU has been pushing for a more than doubling of the minimum basic pay for entry-level miners to 12,500 rand ($1,300) a month, invoking the populist battle cry of a "living wage."

For the producers, it is an unappealing prospect as they grapple with poor margins against the backdrop of soaring costs and depressed prices for the precious metal, used for making emissions-capping catalytic converters in automobiles.

Amplats, a unit of global mining house Anglo American, is still reeling from an 11-day strike by AMCU earlier in October against staff reductions. The stoppage cost almost 1 billion rand ($101 million) in lost revenue.

The prospect of more strikes has had little impact on the spot price of platinum because demand remains relatively weak while there is excess supply in the industry's pipeline.

(Editing by Pascal Fletcher and Anthony Barker)