Losses mount as South Africa faces biggest post-apartheid mine strike

Striking miners chant slogans outside a South African mine in Rustenburg[When the racist apartheid regime fell, there was no socialist revolution. Capitalism was retained in South Africa. The African masses remain exploited and oppressed. It is not enough to reform capitalism, to replace white capitalism with black capitalism. Revolution, all the way to Leading Light Communism, is the only solution. –NP]

Losses mount as South Africa faces biggest post-apartheid mine strike

By Ed Stoddard and Zandi Shabalala

JOHANNESBURG (Reuters) – With no end in sight, South Africa’s platinum strike is set to become the biggest single stoppage to hit the country’s mining sector since the end of apartheid in 1994, and now threatens the viability of an industry already in deep trouble.

Revenue and production losses look sure to top those experienced in 2012, when a wave of rolling, wildcat strikes pushed Anglo American Platinum into the red and forced Lonmin into a rights issue to shore up its finances.

Shareholders are concerned at the prospect of steeper losses this time with almost half of mine shafts already unprofitable.

Entering its eighth week, the wage strike by the Association of Mineworkers and Construction Union (AMCU) against the world’s top three platinum producers – Amplats, Lonmin and Impala Platinum – is likely to drag on for several more weeks, with both sides poles apart and neither blinking.

As costs mount, the sheer scale of the strike is also an unwelcome development for President Jacob Zuma and the ruling African National Congress, with a general election on May 7.

The current strike has so far taken around 440,000 ounces of platinum out of production, as 44 working days have been lost and the daily losses are almost 10,000 ounces.

Amplats, Implats and Lonmin collectively lost around 544,000 ounces to the wildcat strikes in 2012, according to estimates and data provided to Reuters on Monday by the companies.

But there was no single stoppage in 2012 – the big three platinum producers were hit at different times, in periodic eruptions – and the current strike will pass the 544,000 ounce mark if it continues another 11 working days.

The companies have lost over 8.8 billion rand ($820 million) in revenue so far to the strike, according to a website provided by South Africa’s Chamber of Mines which constantly tallies the losses. (http://platinumwagenegotiations.co.za/)

In 2012, according to the data provided to Reuters on Monday, their revenue losses reached around 10.5 billion rand.

So at the current rate of losses, around 200 million rand per working day, the strike will top 2012 for lost revenue in nine working days – a fact certain to cause boardroom alarm.

The social and political consequences are also mounting.

Employees’ lost earnings according to the industry stand at almost 4 billion rand ($372 million) and counting, meaning the household incomes of tens of thousands of mineworkers – who have already missed their February pay check and will soon miss their one for March – are being sorely stretched.

The ANC already has trouble in the platinum belt and by extension areas such as the rural Eastern Cape from where many platinum miners are from, with the government held accountable for the police killing of 34 striking mineworkers shot down at Lonmin’s Marikana mine in 2012.

AMCU emerged as the dominant union on the belt by poaching tens of thousands of members from the once dominant National Union of Mineworkers (NUM), a key ANC ally, in a violent 2012 turf war that killed dozens. That conflict triggered violent strikes that in turn lead to credit downgrades for the country.


With no talks currently scheduled, losses are just going to mount. AMCU’s chief negotiator Jimmy Gama told Reuters the union would reiterate its demands on Tuesday to Amplats.

“The employers have to come to their senses and listen to the demands of the workers,” he said, adding there were no plans at the moment for a resumption of negotiations.

AMCU said in early March it had softened its stance for the first time, saying it wanted staggered increases to bring the basic entry wage to 12,500 rand ($1,200) a month in three years’ time, more than double current levels, instead of immediately.

The companies are sticking to their latest offer of rises of up to 9 percent on the grounds they cannot afford any more given rising costs and depressed prices for the precious metal used for emissions-capping catalytic converters in automobiles.

Government-moderated talks collapsed almost two weeks ago.

Union and industry veterans cannot recall a single mining strike in the post-apartheid era on this scale, with comparisons drawn to a huge, nationwide stoppage in the gold sector in 1987, seven years before the end of white rule.

“Since 1994, there has been no strike of this magnitude,” Frans Baleni, General Secretary of the National Union of Mineworkers, who took part in the 1987 strike, told Reuters.

The strike of 1987 involved far more workers, coming at a time when South Africa was the world’s top bullion producer, with around 350,000 downing tools compared to 70,000 now.

“You need to go back to 1987, there has been no strike like the current once since then,” said Peter Major, a fund manager with Cape-Town based Cadiz who has decades of experience in South Africa’s mining industry.

The 1987 strike only lasted around three weeks and according to NUM cost producers around 250 million rand in lost revenue, which at the exchange rates then was around $125 million.

($1 = 10.7330 South African Rand)

(Editing by David Evans)

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