Social tension, calls for higher wages of significant concern, says Northam CEO
Northam Platinum CEO Glyn Lewis discusses labour relations in the platinum industry. Cameraperson: Nicholas Boyd. Editing: Shane Williams. Recorded: 15/08/2013
JOHANNESBURG (miningweekly.com) – Labour issues, combined with relatively weak economic fundamentals, continued to challenge the platinum sector, and while the weaker rand had provided some respite, it did not present a long-term solution for maintaining a sustainable industry going forward, Northam Platinum CEO Glyn Lewis said on Thursday.
He added at the company’s results presentation for the year ended June that social tension on the eastern limb of the Bushveld Complex, where Northam Platinum’s operations were located, was a significant concern in conjunction with calls by unions for higher wages.
“The eastern limb area is still impoverished, and the local communities have huge expectations from the mines for job creation. There is also a significant amount of rivalry between various community forums, and although it has not been widely reported there have been a number of incidents in the area,” Lewis said.
He stated that a three-week strike by rock-drill operators in April had an impact on production at its Zondereinde mine, with output only increasing marginally to 9 041 kg in 2013, compared with R8 979 kg in 2012. The strike stemmed from a dispute over the payment methodology of production-related bonuses.
The differences have since been resolved and wage negotiations for 2014 have begun, but Lewis stated that he did not believe that the company could afford much more than inflation-linked wage increases.
“Whether there would be an understanding of this among unions is yet to be seen,” he said.
Meanwhile, Northam Platinum on Thursday reported profit of R528-million for the year ended June 30, an increase of 70% on the R310.5-million reported in the previous financial year.
The miner posted a 20% year-on-year increase in sales revenue, to R4.4-billion, on the back of higher sales volumes from its Zondereinde mine combined with the weakness of the rand.
Metal sales for the year were up by 7.3% to 10 704 kg, compared with 9 980 kg in the previous year, while the cost of sales increased by 14% to R3.8-billion, driven by higher volumes sold and higher operating costs.
Operating costs increased by 7.3%, reflecting the sustained impact of higher labour and power costs, which were the most significant components contributing to mining inflation.
The cost of sales was also adversely impacted by a 60.6% increase in refining costs owing to a weaker rand-euro exchange rate and the outsourcing of smelter services; a write-down of R33-million in respect of the smelter was also included in the cost of sales.
“Despite these increases in the cost of sales, the group’s operating profit margin improved to 13.7% for the year, compared to 9.2% for the previous period, owing to the substantial increase in sales revenues.”
Northam Platinum reported a 62.6% increase in earnings per share to 132c.
Meanwhile, while tonnages mined at Northam Platinum’s Zondereinde mine increased by 9.4% to 2 115 712 t; the grade was lower at 4.9 g/t, compared to 5.1 g/t in the previous year. This could largely be attributed to the lower average upper-group two grade, which reflected poor grade control, Northam Platinum stated.
“This will be a key focus area for management in the year ahead. However, in spite of the lower head grade, metal output from the underground operations increased by 5.4%,” Lewis said.
Further, the group’s new Booysendal mine, on the eastern limb of the Bushveld Complex, was successfully commissioned in the second half of the 2013 financial year.
A total of 242 602 t were milled in 2013, to produce 473 kg of metal in concentrate which has been processed.
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