S.African mining strike hopes dashed as union makes new demands - CNBC Africa

S.African mining strike hopes dashed as union makes new demands


by Reuters 0

AMCU has made "unaffordable" new demands beyond a deal struck with producers last week. PHOTO: Jay Caboz

This could dash hopes of an end to the country's longest and costliest mining strike.

The Association of Mineworkers and Construction Union (AMCU)last week put a broad pay offer agreed "in principle" with producers to its members. While the striking miners urged union leaders to accept the salary increases offered, they voiced concerns about the timeframe of the agreement and other benefits such as housing allowances.

"The response (from the union) contains new material outside the principle agreement," said Mpumi Sithole, spokeswoman at [DATA AMS:Anglo American Platinum] (Amplats), the world's biggest producer.

[DATA IMP:Impala Platinum] said the additional demands included a 3,000 rand "come-back bonus" and a moratorium on all restructuring and retrenchments.

"We don't know if the mines are going to make money one or two years from now. How do we agree not to restructure? It's something that we could never agree to," Implats spokesman Johan Theron said.  

Amplats, which was expected to meet AMCU representatives later on Wednesday, and Implats said they could not afford to meet the union's extra demands. AMCU leaders could not be reached for comment.

Amplats, Implats and [DATA LON:Lonmin] , the three companies affected by the strike, said in a joint statement on Wednesday the new demands would set them by back a combined 1 billion rand in addition to the "in principle" agreements.

London-based Nomura analyst Tyler Broda said job cuts were inevitable at the strike-hit companies given the damage done by the stoppages and an oversupply of platinum in the global market.

"The issues around the wage demand and the economic realities of the situation continue to be wide apart and the companies have few options to be able to move from their position," Broda said.

About 70,000 members of the hardline union downed tools in January at Amplats, Implats and Lonmin , hitting 40 per cent of global platinum production and dragging Africa's most advanced economy towards recession.

South Africa's economy contracted 0.6 per cent in the first quarter of 2014 from the previous quarter as mining output fell at the steepest rate in nearly 50 years, pulling manufacturing down with it.

The central bank said on Wednesday that the economy would have grown 1.6 per cent quarter-on-quarter in the first three months of this year if the direct and indirect effects of the platinum strike were discounted.

When it first downed tools, AMCU said it wanted a roughly 150 per cent pay rise to 12,500 rand per month, but platinum companies said this was unrealistic and for much of the negotiations declined to go beyond 10 per cent.

In their latest offer, however, the producers said they would increase pay by about 20 per cent, or 1,000 rand a month.

According to a website run by the three companies, the strike has so far cost them 23 billion rand in revenue, while workers have lost 10 billion in wages.