South African Police Disperse 3,000 Striking Miners With Rubber Bullets

February 4th, 2014 by

Bloomberg reports that South African police dispersed approximately 3,000 striking platinum miners blocking access to the Anglo American Platinum mine northwest of Johannesburg with rubber bullets and water cannon after they refused to allow people in or out of the gates.  Reuters reports that police used rubber bullets and stun grenades, and noted that there have been several violent clashes at various mines during the almost two-week long strike.

The trade union, Association of Mineworkers and Construction Union (AMCU,) is demanding that entry-level pay be more than doubled, with raises for skilled workers as well. Adding to the trouble, the National Union of Metalworkers of South Africa (NUMSA,) which is the leading union in the platinum smelting and refining sector, walked off the job today as well.

The Bureau of Mines, which is the industry association for the sector, released a statement that estimated the total economic impact of the strike was costing the South African economy $36 million USD a day. It also claimed that profit at fully 40% of platinum mines in the country were either marginal, or were operating at a loss, and that the industry would have to resort to massive layoffs if unions persisted in their demands. The South African government has blocked or forced companies to scale back previous layoffs.

Most South African mines have been operating for decades, and are now deeper than many mines elsewhere. The deepest mines penetrate almost 2.5 miles underground, where temperatures can reach 140F degrees. Extraction techniques in these old mines is very labor-intensive compared to newer, mechanized mines, and labor accounts for approximately 50% of total expenses. The state-owned electrical grid is unable to meet demand, despite sky-rocketing prices, and blackouts disrupt industries of all kinds. This has caused total expenses in the mining sector to double since 2009, while platinum prices have dropped sharply.

While tensions have run high during the strike, neither side wants a recurrence of the tragedy that occurred in August, 2012, when 44 people died in labor violence, including 34 shot by police with live ammo. This was the deadliest confrontation by police since the end of the apartheid era.

Platinum prices have not been much affected by the strike so far, as it is believed that the mining companies have approximately a six-week supply of ore cached above ground. Should mediated negotiations fail once again, the platinum spot market could see pressure.