Amcu strike: Stakes could hardly be higher

Johannesburg - Impala Platinum [JSE:IMP] (Implats) said on Friday that two-thirds of its striking workers had indicated by text messages and phone calls that they want to accept the company's latest wage offer and end South Africa's longest and costiest mining strike.

The 14-week strike by the Association of Mineworkers and Construction Union (Amcu), which has also hit Anglo American Platinum [JSE:AMS] (Amplats) and Lonmin [JSE:LON], has taken out 40% of global platinum production and cost the companies nearly R16bn in lost revenue.

"We are still in the process of communicating with our employees, and will only have a clear picture sometime next week," said spokesperson Johan Theron.

Theron told Reuters that workers who were unable to send texts because they have no money for air time were making use of telephones at mine recruitment offices.

"We will have a totally clear picture next week," he said.

"Early indications are that at least two thirds of people who have responded so far are willing to return to work based on the settlement offer."

Amcu general secretary Jeffrey Mphahlele declined to comment on the company's claim, but the union said it planned to hold a press conference in Johannesburg on Monday.

Lonmin said it was communicating "as widely as possible" to ensure employees understood the settlement offer.

"We are using sms, [a] call centre, adverts in local papers, live reads on local radio, etc, in an effort to ensure employees receive the information, whether they are staying locally around the operations, or... in their home countries or provinces," said spokesperson Sue Vey.

Amplats said on Wednesday it was taking its latest wage offer directly to its employees across southern Africa.

"We have been hosting a series of mass meetings in Rustenburg, which began last week, and have [also] started in labour-sending areas - the Eastern Cape, Lesotho, and Mozambique - this week to engage directly with our employees on the revised offer we have tabled," said spokesperson Mpumi Sithole.

Platinum mining companies announced last week they were taking their latest wage offer directly to their employees, after talks with Amcu did not resolve the strike, now in its 99th day.

The producers last week said they would take their latest offer directly to the roughly 70 000 striking miners after talks collapsed, setting the stage for a dramatic showdown.

Raising the stakes, Lonmin spokesperson Sue Vey said the company's offer was valid until May 8 and that workers had to return by May 14. She declined to say what the consequences would be for workers who do not take the offer by then.

Amcu had initially demanded an immediate increase in the basic wage - net salary before allowances such as housing - for entry-level workers to R12 500 a month, more than double current levels. It has since said it would accept annual increases that would reach this level in three or four years.

The companies tabled a settlement offer to Amcu on April 17. The offer would see the minimum cash remuneration (comprising basic wages and holiday, living-out and other allowances) for entry-level underground employees rising to R12 500 per month, or R150 000 per annum, by July 2017.

For Lonmin employees, this reflected an increase in cash remuneration for the highest-paid employees of 7.5%, and an increase for the lowest earners of 9.5%.

For Amplats and Implats employees, this was an increase in cash remuneration of 7.5% for the highest-paid employees, and an increase of 10% for the lowest earners.

By implementing these increases over the period, the cost to company for the lowest-paid underground employees would be in excess of R17 500 per month, or R210 000 per annum, by July 2017.

The offer included the payment of back-pay related to the annual increase. This would take effect from July 1 2013 for Amplats and Implats employees, and from October 1 2013 for Lonmin employees.

Rustenburg in the firing line

The companies are clearly trying to force the hand of Amcu and betting that its rank and file are ready to return to the shafts after three straight months without pay.

Employees have lost more than R7bn in wages so far, according to an industry website that provides a running tally.

The stakes could hardly be higher, given the producers' huge and escalating revenue losses.

Restructuring is considered likely after the dust clears from the strike, with job losses expected, especially around Amplats' struggling Rustenburg operations, which the company has signalled it could sell or mothball.

This makes the strike a political headache for President Jacob Zuma and the ruling African National Congress (ANC) with a general election looming next Wednesday.

Amcu emerged as the top union in the platinum shafts after poaching tens of thousands of members from the National Union of Mineworkers (NUM) in a vicious 2012 turf war that killed dozens of people and triggered a wave of violent wildcat strikes.

Amcu and its charismatic president Joseph Mathunjwa have tapped a deep vein of resentment among black miners who still feel they are not reaping fair benefit from the country's rich mineral resources despite 20 years of multiracial democracy.

But the industry is bleeding cash and underlying its woes is the muted price reaction to the stoppage, even though more than 700 000 ounces of production have been lost so far - about 12% of annual global output.

Spot platinum is fetching around $1 417 an ounce, a little lower than it was on the eve of the strike.

Prices are expected to climb back to levels not seen in over a year later in 2014 as the impact of the strike starts to be felt, analysts at Thomson Reuters said.

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