The Association of Mineworkers and Construction Union (AMCU) is knock-ing on the recognition door at Northam Platinum’s Zondereinde mine, which escaped the five-month platinum strike, the longest in South Africa’s history.

New Northam Platinum CEO Paul Dunne said AMCU had gained ground at Zonde-reinde, a traditional stronghold of the long-standing National Union of Mineworkers (NUM).

Speaking last week at the JSE-listed platinum mining company’s presentation of results for the 12 months to June 30 – which saw its earnings per share nosedive 98.2% and increased borrowings drive up financing costs – Dunne said that AMCU now had 14% of the union membership at the Limpopo province operation, a mere 1% below the recognition threshold.

“We keep a close watch on these numbers,” said Dunne, who joined Northam from Impala Platinum.

Given the shifts in union affiliation through-out the western limb of the platinum-rich Bushveld Complex and the potential for inter-union rivalry, Northam’s operational manage-ment was keeping a keen eye on developments among the employees and labour associations.

“We have a clear strategy to deal with issues quickly as they arise,” Dunne said, adding that implementation of the second year of the two-year wage agreement had gone smoothly and would remain in place until June 2015.

The company reached a 7.5% to 9.5% wage agreement with the NUM, whose own 11.5-week strike ended on January 29.

Dunne warned that any further industrial action in the near to medium term would have a severely damaging impact on Northam, the platinum industry and the country.

The company only managed to squeeze out a marginal profit of R19.6-million in the financial year (FY) to June 30, when earnings per share collapsed to 2.4c, compared with 132c in FY 2013.

“We’ll be watching and managing developments to avoid any undue disruption to the operation,” Dunne said.

Employees lost R150-million in wages in the Zondereinde strike, equating to 48 000 oz of platinum group metals (PGMs), which was worth R750-million in foregone revenue.

Earlier this year, NUM general secretary Frans Baleni publicly objected to Dunne’s appointment and gave notice of his union’s intention to mobilise against it.

“He’s going to be baptised by fire,” the general secretary said in response to journalists questions on an NUM media release, which accused Dunne of triggering a “tumultuous tide of turmoil” during his tenure at Impala Platinum and accusing him of a “divide and rule” approach.

Northam’s FY 2014 operating profit slumped 93.4% to R61.5-million and increased borrow-ings put R1-billion on the strengthened balance sheet.

Taxation dropped from R169.1-million to R45.8-million.

A fourth-quarter recovery is reported at Zondereinde platinum mine, where the smelter has been rebuilt for the second time in as many years at a cost of R54-million.

No FY 2014 dividend has been declared in view of the financial requirements at Booysendal platinum mine project, where declining capital expenditure (capex) reflects the end of its construction phase.

Dunne credits his predecessor, Glyn Lewis, with the ramp-up state of Booysendal, the company’s second PGM mine, which is providing it with considerable latitude.

Supplemented by Booysendal’s contribution and inventory, Zondereinde sales volumes rose to R5.3-billion, compared with R4.4-billion in the previous financial year, which compensated marginally for the lower dollar PGM prices.

The cost of sales rose 38.4% on higher operating costs, increased refining costs and a far higher depreciation charge owing to the first-time inclusion of Booysendal mine costs.

The net group taxation charge fell 84.5% to R26.2-million (FY 2013: R169.1-million).

The additional R1-billion arose from a R600-million clawback rights offer underwritten by Coronation Asset Management and R400-million extra revolving credit.

Some R120-million was also raised through a tap issue on the company’s domestic medium-term notes programme.

Zondereinde capex was R351-million for the smelter rebuild and deepening project and hostel conversion, and capex in the coming year is forecast at R331-million, with the deepening project absorbing R105-million, the autoclave replacement R28-million and the hostel conversion R42-million.

Full ramp-up of the mechanised Booysendal mine, which posted an operating loss for the year, is expected by the end of 2015.

Booysendal’s capex was R539.6-million and capex in FY 2015 is forecast at R483.4-million, of which R78.4-million will be allocated to routine capital and, of the R405-million project capital, R50-million will be spent to investigate the feasibility of mining Merensky ore at Booysendal.

Dunne reported progress with the com-pany’s black economic-empowerment transaction.

“Once this transaction is successfully put to bed, we’ll be well positioned to pursue our strategic ambitions,” Dunne said, citing housing as the company’s other Mining Charter shortfall area.

At Zondereinde, increasing the current 15-year life-of-mine through the deepening project, further exploitation of the upper group two (UG2) orebody and improving the process plant to deal with a higher UG2 ratio would be prioritised.

At the mechanised Booysendal mine, in Limpopo, Australian expertise brought in to upskill local operators is still present at the mine, Dunne said.

“We’ve got one person left still helping. I wouldn’t say we’re done yet. There’s still some work to go. It has been very helpful and is part of the training and development of the people on that mine,” said Dunne, who added that the company would be benchmarking itself against the performance at the Two Rivers and Mototolo mechanised operations.