Recent wage agreements between chief South African platinum producers and collective bargaining agent the National Union of Mineworkers (NUM) have provided some cause for cautious optimism regarding future labour rela- tions, asserts research firm Johnson Matthey publications manager Dr Jonathan Butler.

Butler, who is tasked with writing the organisation’s half-yearly platinum-group metals (PGMs) international market review, references the two-year wage agreements between the NUM and international platinum leviathans Anglo American Platinum and Impala Platinum as a positive indicator of future labour relations.

“The headline wage increases of between 8% and 10%, which were agreed upon late last year, are well above the consumer price index, but are lower than some of the recent wage settlements reached by South African producers. This decreases the possibility of disruptions as a result of wage negotiations at these producers’ operations this year,” he tells Mining Weekly.

Platinum giants Lonmin and Northam Platinum have also secured medium-term wage agreements, with Lonmin committing to a two-year pay increase of up to 10%, and Northam agreeing to a 9% to 9.5% increase over the next two years, which Butler believes has removed the threat of immediate industrial action.

However, he does emphasise that the industry still faces possible disruption as a result of lingering labour pressures.

“We saw a number of contractor strikes last year that have the potential to reoccur and disrupt future production,” he adds.

Meanwhile, NUM national spokesperson Lesiba Seshoka tells Mining Weekly that as a result of these two-year deals, the organisation does not expect strike action this year, but adds that certain unresolved grievances remain.

“In certain instances, there are issues between employee and producer that may cause disruptions if they are not adequately addressed,” he says.

Seshoka did not expand on the nature of these grievances.

Potential PGM Industry Threats

While industrial strike action is regarded as less of a threat in the coming year, on- going talk of nationalisation of the South African mining industry is creating some cause for concern, says Butler.

He emphasises that, while nationalisation is not South African government policy, it remains one of several threats to producers and has a discernible impact on investor sentiment, particularly in the mining equities sector.

Further, despite Zimbabwe also con- sidering calls for nationalisation, Butler says the country’s platinum-mining industry recorded an excellent performance in the first half of last year, with major miners in Zimbabwe operating at full capacity despite uncertainty created by the government’s indigenisation programme.

Butler claims the most pressing challenge for South African producers is not possible nationalisation, but rather issues surrounding cost increases, as well as barriers to investment in future capacity, given current PGM prices and the rand basket price.

In Johnson Matthey’s interim platinum review for 2011, published in November, he argues that increased global economic uncertainty may generate negative market sentiment, which could start to affect physi- cal demand for industrial commodities, including PGMs.

“Overall, global markets look set for a period of slower growth this year, with the risk that market pessimism could translate into a genuine drop in physical demand,” he warns.

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