Make or break week for miners

2014-02-02 14:00

This is crucial week for role players in the strike by 100?000 workers on the country’s largest platinum producers.

If the parties don’t come within reasonable reach of settlement, it could develop into a dangerous and damaging industrial action similar to last year’s 11-week strike at Northam Platinum.

That strike was settled with workers gaining just 0.5% on Northam’s prestrike offer, but they sacrificed almost 25% of their annual income due to the 77 days they had been on strike.

That strike could be seen as irrational, and can only be explained as reflecting the immense anger among workers. Anglo American Platinum (Amplats), Impala Platinum (Implats) and Lonmin realise

to some extent they will have to make a compelling offer in light of the demand for a basic entry wage of R12?500 a month, which started after the Marikana shootings.

That demand represents an increase in excess of 100% in many instances. Conditions in the platinum industry make it impossible to achieve realistic progress this year. The only option is to offer a multiyear agreement and to collapse some of the lowest-paid job gradings into higher job categories.

The employers offered a three-year agreement last week, which will bring the B-grade jobs within striking distance of the R12?500 target in the 2017 calendar year, but it didn’t offer any progress on raising the lowest-paid workers in the

A-grade job categories to higher positions. At some of the companies, this has already been done to a large degree. After the extended strike at Implats last year, the company collapsed it’s five A-grade job categories for general workers into one category. The other two still have separate A-grade categories. The big question is what this will cost the companies. At all three companies, several shafts are currently lossmaking, but are kept in operation in the belief that metal prices will recover.

A steep increase in labour costs, generally between 40% and 50% of total operating costs, will certainly lead to closures and job losses. The employers can’t plead poverty with much credibility. The low price of platinum is a result of their own greed – oversupply to the market in good times to make more money.

Oversupply gave speculators the chance to build stockpiles in exchange traded funds (ETFs) where investors buy paper backed with physical metal that is traded when the price rises.

There’s an estimated 5?million to 6?million ounces held by banks and hedge funds in ETFs, which caps price increases and will continue to do so for some time to come.

A more serious limitation is the ever-increasing supply from recycled platinum – mostly from old vehicle exhausts – which delivered almost 2?million ounces to the market last year. South Africa supplied 4.1?million ounces from mine production in the same period.

The obvious solution is a gain-sharing agreement, but in the short term, employers will have to convince workers to return to work with a cash offer. If they don’t succeed, they will probably resort to the hardened attitude Northam management adopted toward its workforce, which is represented by the National Union of Mineworkers.

It will have the same effect on rival union Amcu if the strike continues unabated after the end of this week. The effect will be a return to the anarchistic “worker committees”, which reigned with terror in the weeks after the Marikana shootings.

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