SA Miners brace for labour unrest

SA Miners brace for labour unrest

Mining companies in South Africa are bracing for another potential year of labour unrest.

Platinum miners and labour unions are in talks next week to try to hammer out a deal that could avert a strike of similar magnitude to 2014 when the Association of Mineworkers and Construction Union (AMCU) forced major producers Amplats (LSE:AAL), Implats (OTCMKTS:IMPUY) and Lonmin (LSE:LMI) to shed over 70,000 jobs.

The strike lasted 21 weeks, cost the industry R24 billion, and resulted in 1.3 million ounces of lost production – about a third of global output.

AMCU is demanding a pay rise of 56%, in line with a “living wage”, while the National Union of Mineworkers is asking for a 20% wage hike – well over the 6.1% rate of inflation. The mining companies say they can’t afford the pay increases, arguing that last year they were forced to tap shareholders to raise cash, and that the unions’ demands are unrealistic.

The unions however will no doubt argue that the market is turning with Platinum prices up by 22% this year.

South Africa and Russia combined account for close to 80% of global supply of palladium and 70% of platinum output which is mainly used to clean emissions in automobiles.