At least 70,000 miners in South Africa are scheduled to begin striking against the three largest platinum producers in the world, Anglo American Platinum (Amplat,) Impala Platinum (Implats,) and Lonmin. The affected mines account for 70% of global platinum production.
The union, Association of Mineworkers and Construction Unions (Amcu,) is demanding entry level salaries more than double from 5,500 rand to 12,500 rand ($1149) a month, with raises for skilled workers as well.
The call to walk out has spread to South African gold mines operated by Anglo Gold Ashanti, Sibanye Gold, and Harmony Gold, though the strikes there are not expected to impact the gold market much.
Multiple strikes in 2012 cost platinum miners 480,000 ounces in lost production. Since that time, platinum has seen a substantial drop in price, while labor costs in South African mines already accounts for 50% or more of expenses. Increasing failure of the electrical grid in South Africa, despite sharply higher rates, is also seen as weighing on margins.
Platinum mining companies have been dealing with hostility not only from workers but from the South African government itself over plans to reduce workforces and mothball mines that are currently unprofitable. Amplat, which saw its first year of negative earnings last year, had to back down from plans to close four mine shafts and lay off workers.
Union leaders have been whipping up support for strikes among its membership by recalling the 44 workers who died in violence between strikers and police at the Marikana platinum mine in 2012. Amcu feels it must beat the concessions won by rival union NUM in its 75-day strike against Northam Platinum, a smaller mining company. National union of Mineworkers delegates accepted Northam’s offer of a 9.5% pay increase for “core” workers plus 9% “living out allowances” ( a sort of per diem,) with slightly smaller raises for other classes. This means that Amcu must secure at least a 10% pay raise.
The present labor tensions have been brewing for months, and companies have worked to build up above-ground platinum stocks, should strikes be called. Since the average platinum mineworker in South Africa feeds ten family members, the companies are banking on being able to wait out the union if negotiations fail. The major mining companies have already signed agreements with NUM and smaller union Solidarity, which strengthens their hand.
That said, the companies have extended offers to continue negotiations with Amcu, with the hope that a compromise can be reached. Both sides pin their hopes on forecasts that platinum prices will rise on industrial demand, most significantly demand for catalytic converters from an improving automotive sector.