JOHANNESBURG (minngweekly.com) – A higher level of security was needed at Impala Platinum’s strike-hit operations in Rustenburg to stop returning workers from being intimidated, Implats corporate relations executive Bob Gilmour said on Thursday.

Implats share price fell 3.66% to R158 a share ahead of the JSE’s close, despite the company reporting a headline earnings rise of 67.8% to R3.47 billion in the six months to December 31.

With no end in sight to the month-long strike, Gilmour told Mining Weekly Online in a video interview that the current level of security was insufficiently strong to allow for a critical mass of workers to resume operations.

“If this had been a normal strike over a wage issue, it would have been solved long ago,” said Gilmour.

“The fact that it has been going on for four weeks and the intimidation level increases as we try to rehire, does indicate that there could be something else in the background being played out here,” he added.

Issues were being brought to the fore that were not strike-related, with only 6 000 workers rehired out of 17 000 dismissed.

“This has gone beyond a strike. We’ve got to stop this intimidation and give people a chance to apply for their jobs and to go back to work,” Gilmour said.

Implats marketing executive Derek Engelbrecht forecast that noticeably lower South African production would feed into stronger demand and drive the market into a deficit of 330 000 oz, the size of which would come as a surprise to many.

Assuming that the current investor trends continued, significantly higher expected demand would completely overshadow lower supplies, leaving the market with a substantial deficit over a period of years, Engelbrecht added.

Outgoing Implats CEO David Brown, who was delivering his last set of results after 14 years with the company, said the key issue of the current labour unrest that was confronting the company had been the emergence of the Association of Mineworkers and Construction Union (AMCU) as a rival to the long-established National Union of Mineworkers (NUM).

He said the NUM’s rejection of the rock drill operators (RDOs) and the NUM’s inability to communicate with its members had worsened the situation.

The impact of the strike had resulted in a loss of 60 000 oz of platinum, equating to R1.2-billion in revenue.

Because it was operating in a covert fashion, the company was unable to hold discussions with AMCU as it was not the legal representative of the workers and the company had a legal and a moral obligation to continue to negotiate through the NUM to find a solution.

Brown condemned the high levels of intimidation and said the company needed to ensure that there was an adequate police presence in the area to break the cycle of intimidation.
Most of the people involved in the civil disorder that had broken out in the area were not the company’s employees.

“This has spread to the local informal settlements and other villages around the mine area,” he said.

The 50% salary increase that the RDOs were informally demanding and the flow-through of that to the entire workforce would cost the company an extra R2-billion a year and probably result in significant job losses.

Implats was also applying to the Zimbabwe government for a review of Zimbabwe’s new mine surface rental fees that have been gazetted, which translated into a cost of $48.5-million for Implats’ Zimplats operation compared with the current $45 000 a year.

If these fees were implemented as gazetted, it would cost the Zimbabwe mining industry as a whole some $1-billion a year, which was equal to its entire revenue.

PLATINUM MARKET

Implats reported in addition that the six months to December 31 had seen a reversal of global economic conditions driven primarily by the worsening eurozone crisis.

The weakening South African currency had, however, ameliorated the downward pressure that this had exerted on prices, resulting in gross margins staying above 30%.

Implats’ major projects, the development of three new shafts at Rustenburg and the Phase 2 expansion at Zimplats, was ongoing, as were discussions with the Zimbabwe government on indigenisation.

The six fatalities that Implats suffered during the half year all occurred at Impala Rustenburg, with three the result of falls of ground, two owing to equipment handling incidents and one the result of an explosives incident.

The company’s lost-time injury frequency rate worsened 18.4% to 5.85 injuries for every million working hours, Marula deteriorating by 27.9% to 11.75.

In contrast, Zimplats improved by 70.7% to a record of 0.22.

Platinum prices, which briefly touched a high of $1 900/oz in August, succumbed to a flight of capital into the US dollar and gold, resulting in a $400/oz drop in September alone. Prices ended the year at around $1 400, having tested the mid $1 300`s in late December, and averaged $1 720 for the year.

An interim cash dividend of 135c a share has been declared for the half year.
 

To subscribe to Mining Weekly's print magazine email subscriptions@creamermedia.co.za or buy now.