Amplats believes Amcu will cave

2014-03-30 14:01

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Job losses are inevitable, even if the strike comes to an end, reports Dewald van Rensburg

Platinum mines are going to shed jobs even if the nine-week-long strike comes to a speedy resolution, according to Anglo American Platinum (Amplats).

The country’s major platinum producer believes the strike led by the Association of Mining and Construction Union (Amcu) will end soon because of pressure from below.

But the scaling down of the precarious Rustenburg mines is on the horizon.

“It feels like we are entering settlement territory,” said Amplats CEO Chris Griffith at a media briefing on Friday, citing the pressure on the 25?500 or so Amplats employees who last week missed a second month’s salary.

The strike might break in two weeks, he suggested.

At the same time, job losses were probably already inevitable, according to Griffith.

Amplats’ Rustenburg mines, where the strike action is concentrated, were “borderline” a year ago, he said. “You have to ask ‘when do we shut down Rustenburg?’ The same goes for the Union [mine].”

The “final solution” in the mining industry is more mechanised and more productive mines.

This has been the Amplats view since long before the strike, according to Griffith.

“In 10 years, no one wants rock drill operators drilling the way they do now.”

During this transition, job losses are inevitable, but the current strike is accelerating that, he said.

Earlier in the week, Impala Platinum said much the same, telling financial daily Business Day it is considering the mechanisation of its new Leeuwkop mine as well as new shafts at its existing Rustenburg operations.

Amplats, Impala and Lonmin have been invited back to the Commission for Conciliation, Mediation and Arbitration tomorrow after Amcu returned there this week for the first time since the talks were “adjourned” on March 5.

These meetings “cannot be called negotiations”, said Griffith. According to him, they are “engagements to put our positions across”.

He hit out at Amcu’s “dogma” of a R12?500 a month salary and admitted the strike has already lasted longer than he had expected. The union’s major concession on the R12?500 demand has been that the mines can phase it in over four years, possibly without changing the various other elements of mine workers’ pay.

Amcu president Joseph Mathunjwa this week told members marching on Impala’s Joburg headquarters the union wanted to organise sympathy strikes in other sectors.

This echoes an announcement by its confederation partner Nactu earlier in the week that it had set up a strike committee to drive “protest programmes”.

Nactu also says all its other affiliated unions will henceforth demand the mine workers’ emblematic R12?500 as a basic salary in all the sectors where they organise.

Griffith suggested the mines might offer a slight improvement on their standing 9% offer within a “settlement zone”, but also that “double digits” are not on the table.

“We can maybe do R12?500 at total cost to company in three years,” he said. Amcu might be able to save face with that, he suggested.

That would still be a big jump for Amplats.

Amplats’ standing offer puts the entry-level total cost to company at R10?758 in three years’ time.

The same percentage offer puts Impala at R11?746 and Lonmin at R12?172 by next year, reflecting the higher basic wages at these companies.

When asked about whether the three companies might break ranks, he said they are still “nicely lined up” in opposition to the R12?500 demand.

But they might end up settling at slightly different percentages, he said.

He also tried to distance himself from the fears expressed by the other companies that unattended production panels underground could be falling apart.

If the strike ends, the major concern is not so much about the physical state of the mines, but rather the possibility of “simmering hurt” at work.

Apart from the lost production during the strike, the mines will require a month to ramp back up to full production.

A real problem would be if returning strikers “make that as difficult as possible”, according to Griffith.

How big is it?

By Friday, Amplats had lost 51 days of production at its strike-hit mines, which it tallies at 173?000 ounces worth R4.7?billion. That’s more than the 160?000 ounces the largest platinum company lost in the strike wave of 2012.

One crude but popular measure of how severe a strike is, is the “working days lost” calculation the department of labour publishes in its Industrial Action Annual Report.

It simply multiplies the estimated number of strikers (70?000) by the duration of the strike (51 days by today), giving just more than 3.5?million working days for the Amcu strike up to today.

Despite the historic 2012 strike wave in the mining industry, the sector only clocked up 2.7?million lost days that year.

In 1987, the historic gold mining strike by the then nascent NUM under Cyril Ramaphosa lasted three weeks and involved 360?000 mine workers.

That adds up to 7.5?million strike days, a record that stood until the public sector strikes of 2007 and 2010, which racked up an estimated 9.5?million and 20.7?million lost days, respectively.

Mines try to avoid price spike

Griffith tried to dispel any suggestion the strike could force Amplats into a force majeure.

Until now, all three companies have been secretive about their stockpiles, but speculation around a supply crunch seems to have forced Griffith’s hand into reassuring the market.

“In a poker game you never show your hand,” he told reporters.

Amplats has sold about half of the 430?000 ounces it had in hand at the beginning of the strike, he said.

This suggests it could go another two months before not having enough platinum to meet obligations.

If that did happen, Amplats would “go to extraordinary lengths” to supply customers, including buying metal to resell, he added.

“We don’t want a price spike. That will lead to substitution.”

Unlike Impala and Lonmin, Amplats still has 60% of its production in place at its opencast and mostly mechanised Mogalakwena mine in Limpopo, as well as in smaller mines.

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