Tags: Platinum | Union | Producers | Strike

Platinum Union Signs Producers' Deal That Ends Five-Month Strike

Tuesday, 24 June 2014 12:48 PM

The three largest platinum companies and the main union at their South African mines signed a deal to end a crippling five-month strike after the labor group’s members accepted pay proposals from producers.

Anglo American Platinum Ltd., Impala Platinum Holdings Ltd. and Lonmin Plc each signed three-year agreements with the Association of Mineworkers and Construction Union, they said in separate statements. Employees are expected to return to work Wednesday, they said in a joint statement.

“It is our sincere hope that our companies, our industry, our employees and all other stakeholders will never again have to endure the pain and suffering of this unprecedented strike period,” the chief executive officers of the three producers said in the joint statement. “The road ahead remains a challenging one and it will take some time for our operations to resume full production.”

The stoppage by at least 70,000 miners cost the companies 23.9 billion rand ($2.2 billion) in revenue and workers 10.6 billion rand in wages since Jan. 23, according to the producers. The deadlock pushed South Africa’s economy into contraction in the first three months of this year as mining production plunged. The agreement applies until June 30, 2016.

Thousands of strikers shouted out their approval for the offer at a mass rally held by the AMCU at a stadium in Rustenburg, 120 kilometers (75 miles) northwest of Johannesburg.

Shares Decline

Lonmin declined 1.8 percent at 2:18 p.m. in London, paring Monday’s 4.5 percent advance after the outcome of the union’s rally. Impala fell 0.4 percent in Johannesburg, after adding 1.1 percent Monday, while Amplats, as Anglo Platinum is known, dropped 1.8 percent after Monday’s 1.6 percent gain.

Palladium for immediate delivery advanced 1.1 percent to $831.05 an ounce, while platinum, used to make jewelry and devices that reduce harmful emissions from vehicles, gained 1.1 percent to $1,472 an ounce. South Africa accounts for about 70 percent of all the platinum mined globally.

South Africa’s credit rating was cut on June 13 to one level above junk by Standard & Poor’s, which cited the country’s longest and costliest mining strike as among reasons for the assessment. The rand strengthened 0.7 percent against the dollar yesterday after the union’s meeting.

Agreement Detail

The deal includes annual increases of 1,000 rand a month for the lowest-paid underground workers for the first two years of the agreement, the producers said in a joint statement. Lonmin will apply the same raise in the third year, while at Impala and Amplats, the increase in that period will be 950 rand monthly. Those adjustments are on current pay of about 5,000 rand to 6,000 rand a month. South Africa’s inflation rate was 6.6 percent in May.

The deal will be applied from July last year at Amplats and Impala and from October at Lonmin. Workers won’t receive back-dated payments for the period they’ve been on strike.

Accommodation allowances will increase to 2,000 rand a month and stay there for the duration of the agreement, from 1,950 rand now at Lonmin and 1,850 rand at Impala. At Amplats, it will rise by 6 percent annually.

Lonmin has agreed to reinstate 236 workers who lost their jobs, he told members. Amplats employees will get food parcels and vitamins in their first month back at work, he said.

The AMCU’s original demand was that basic monthly wages of the lowest-paid workers be more than doubled to 12,500 rand. The union then relaxed the date by which this could be reached. Some workers will be earning this figure within three years, AMCU President Joseph Mathunjwa said at yesterday’s rally.

Job Cuts

Possible job cuts will remain “a challenge” for the union, he said.

Before the union leader addressed the crowd, AMCU members marched around the stadium’s track, singing as they went. A man in the group held up a sign reading “rest in peace NUM,” referring to the National Union of Mineworkers, which the AMCU displaced as the biggest representative of platinum employees. The miners also held up a coffin painted red and bearing a NUM sticker.

Mines Minister Ngoako Ramatlhodi said he was glad the parties had reached an agreement. “We obviously, together with the country, breath a sigh of relief,” Ramatlhodi said on Johannesburg-based radio station SAfm.

Chamber of Mines Chief Negotiator Elize Strydom said the industry group was pleased at the outcome, for producers and miners.

“The hard work starts now,” Strydom said on Johannesburg-based Talk Radio 702. “It’s going to take time for production to get to levels prior to the strike. I think we are still going to have to do a lot of work to convince the world and investors that platinum is a good commodity to invest in.”

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The three largest platinum companies and the main union at their South African mines signed a deal to end a crippling five-month strike after the labor group's members accepted pay proposals from producers.
Platinum, Union, Producers, Strike
Tuesday, 24 June 2014 12:48 PM
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