Talks to end a strike over pay at the world’s largest platinum producers collapsed as South Africa’s state mediator said employers and the main union remained far apart after six weeks of negotiations.
The Commission for Conciliation, Mediation and Arbitration “has decided to adjourn the process to give all parties an opportunity to reflect on their respective positions,” it said in a statement yesterday.
More than 70,000 members of the Association of Mineworkers and Construction Union have been on strike since Jan. 23, cutting platinum production in a country that accounts for more than two-thirds of global output of the metal. Anglo American Platinum Ltd., Impala Platinum Holdings Ltd. and Lonmin Plc have offered to raise entry-level wages, which range from 5,000 rand ($467) to 5,700 rand a month, to as much as 7,200 rand by 2015.
The AMCU initially sought immediate increases in basic wages to as much as 12,500 rand. On March 4, the union said it would give the companies three years to meet the target. The producers said the AMCU’s demand remains unaffordable.
The companies’ refusal to budge further on pay is the right thing to do, even as they incur production losses, Ben Davis, an analyst at Liberum Capital Ltd., said yesterday by phone from London. “It is exactly what shareholders would expect.”
Mining companies are already the highest payers among labor-intensive industries in South Africa and it’s “imperative that the economic realities are taken into account,” the three companies said in a joint statement yesterday.
The producers have lost a combined 7 billion rand in revenue to date, while employees have forfeited 3.1 billion rand in wages, the companies said on a website set up to give updates on the strike.
Lonmin, the third-largest producer, won’t meet its full- year sales target of at least 750,000 ounces of the precious metal, it said yesterday, citing the strike. The company said it can’t estimate the increase in costs caused by the walkout.
“The unit-cost guidance will as a result also be negatively impacted,” Lonmin said. “Until the strike has ended, Lonmin is unable to provide specific details on these changes.”
Platinum for immediate delivery gained 0.9 percent to $1,478 an ounce by 7:30 p.m. in Johannesburg yesterday. The metal, used for jewelry and catalytic converters in vehicles, has risen 7.7 percent this year.
Lonmin fell 3.6 percent to 52.30 rand in Johannesburg trading yesterday, the lowest close since Dec. 24. Amplats, as the biggest producer is known, gained 0.7 percent to 448 rand. Impala Platinum was little changed at 114.80 rand.
Amplats is “discouraged by the turn of events,” Chief Executive Officer Chris Griffith said in a statement. “We are hopeful though that AMCU will come to recognize and appreciate the realities of the company’s position and will work toward a solution that will benefit its members.”
Impala CEO Terence Goodlace said the companies “remain committed to finding an affordable and sustainable solution” to the impasse over pay.
A Johannesburg court is due to rule by the end of the week on whether the AMCU and its leaders are in contempt for allegedly ignoring an order handed down in January that the union prevent violence during a strike.
The application was brought by Amplats after an AMCU official was killed in clashes with police and two others were arrested for the attempted murder of a company employee last month.
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