AMCU leader takes diplomatic tone ahead of platinum wage talks

The leader of SA's biggest union in the platinum industry, which had the longest-ever platinum-mining strike and which self-identifies as "militant", the Association of Mineworkers and Construction Union president Joseph Mathunjwa is sounding rather diplomatic.

Laying out the union's demands in the upcoming platinum pay talks, Mathunjwa stopped short of his usual fiery rhetoric. "It's a negotiation," he said, after being asked what would happen if producers refuse to meet AMCU's minimum wage requirement.

One possible reason for the change in tone: AMCU was this year forced to call off a five-month pay strike at Sibanye Gold with little to show for it. Still, Mathunjwa's not ruling out a fight with the platinum miners either.

"Because there's inequality, the only recourse that we have is a right to strike," he said.

The union demanded wage increases of as much as 48% from producers in the world's top supplier of the metal, setting the stage for a tough fight in upcoming pay talks.

AMCU wants minimum basic pay of R17 000 a month, Mathunjwa said Friday. That compares with about R11 500 currently earned by the lowest-paid workers.

The opening salvo - issued to companies including Anglo American Platinum, Sibanye Gold, and Impala Platinum Holdings - represents a substantial step up from the labour group's years-long rallying cry for "a living wage" of at least R12 500 a month. That minimum still hasn't been achieved at all producers.

The union wants companies to share more of their profits following rallies in the prices of palladium and rhodium, which are dug up alongside platinum. A weaker rand has also boosted miners' earnings.

Metal and mining investors will be watching the negotiations closely for any potential strike. The militant labour organisation held the longest platinum mining strike in the country in 2014.

While Friday's demand looks high, it's not necessarily a harbinger of the final outcome as South African unions often start off with big asks. In the last wage round, AMCU accepted an increase of 12.5% for the lowest-paid workers, after initially demanding a 47% increment.

Market reaction

The FTSE/JSE Africa Platinum Mining Index pared some of its earlier gains. Precious metals prices are rallying Friday, with gold hitting a 14-month high and palladium reaching its highest since late March.

"I don’t believe these type of demands are affordable for the industry and would put its sustainability at risk, so it's unlikely that the PGM producers would accede to these demands," said Arnold Van Graan, an analyst at Nedcor Securities.

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