Photo by: Duane Daws
JOHANNESBURG (miningweekly.com) – As the impasse between labour, the Association of Mineworkers and Construction Union (AMCU) and platinum producers Anglo American Platinum (Amplats), Impala Platinum (Implats) and Lonmin continued into its eleventh week, the threat of mine closures and potential restructuring loomed.
The crippling strike, which started on January 23 after wage negotiations between AMCU and the world’s three largest platinum producers stalled, had already cost employees nearly R5.5-billion in wages and the companies over R12-billion in revenue.
“The ongoing strike action is unlikely to peacefully resolve itself, given the divide between the companies’ offer [of 9%] and AMCU's demands [of an entry-level wage of R12 500], Liberum’s mining team said in a statement to clients on Thursday.
AMCU had publicly stated during marches to all three producers over the last month that it was prepared to continue striking for the next six months if the producers did not bow to its demands.
But trade union Uasa divisional manager for mining workers Franz Stehring believed the “worst of the [economic] destruction” caused by the protracted AMCU-led strike was still to come – after the strike had been resolved and the dust had settled.
He warned that the upcoming aftermath of the strike action – with about 22 000 employees potentially facing retrenchment – needed attention now.
“Already, talk is doing the rounds about the international platinum sector being too large, about a preference for higher skilled and fewer employees [and for] openpit and mechanised mines [besides others],” said Stehring.
However, Liberum did not believe that the current crisis in South Africa’s platinum industry presented the opportunity for a “massive restructuring”.
“We think the market is getting ahead of itself on the possibility of restructuring the platinum business and will likely be disappointed with the final outcome,” Liberum said, adding that restructuring would be significantly “destructive” on both financial and social fronts.
Liberum’s comments emerged as Amplats parent company Anglo American CEO Mark Cutifani voiced his view that divesting the strike-afflicted platinum division could be an option if it did not perform as well as the others in the diversified group’s portfolio.
“Amplats may seek to find a buyer of these underperforming assets, but we do not believe there are any obvious suitors in the current environment,” Liberum commented. However, Sibanye Gold and Exxaro had both expressed interest in a potential entry into platinum if the embattled unit went on sale.
Newswire Reuters quoted Cutifani as saying that the longer the strike continued, the higher the chance that some of the shafts might not reopen once activity restarts.
Mining Weekly previously reported that Amplats CEO Chris Griffith hinted strongly at a closure of more Rustenburg shafts and said, with one-third of the year’s production dissipated as a result of the strike, Amplats’ Rustenburg operations would not make a profit.
Amplats last year underwent a significant and much-contested restructuring initiative to recoup losses at the underperforming Rustenburg mines. The move led to the closure of two mines and the loss of about 7 500 jobs.
“The benefits from shutting down the high-cost, labour-intensive mines are clear, but to do so in a country with 25% unemployment and growing support for far left parties like the Economic Freedom Fighters, would not be without political consequences,” Liberum warned.
AMCU president Joseph Mathunjwa had warned the producers that, should one of the three platinum producers at which AMCU was striking attempt to close a shaft, the union would declare a solidarity strike at all three miners’ operations.
“We forewarn you, if you close one of the shafts, there will not be a single shaft you can operate. If Amplats closes one shaft, Lonmin will also not operate. We will have mass solidarity in our strikes and all the platinum mines will be back to square one,” Mathunjwa said during a march to Lonmin earlier this month.