Nine week miners strike has co

The Cornubia Housing Project launched by President Jacob Zuma in Durban, KwaZulu-Natal. (Photo: GCIS)

Nine week miners strike has cost platinum industry $1 billion

Global platinum industry and local economy suffering the effects of South African miners’ nine-week wage impasse

Nine week miners strike has co

The Cornubia Housing Project launched by President Jacob Zuma in Durban, KwaZulu-Natal. (Photo: GCIS)



A nine-week strike by miners in South Africa’s platinum industry has caused “irreparable” damage and cost the sector nearly R10 million ($1 billion).

Anglo American Platinum, Lonmin and Impala Platinum are being represented by the Chamber of Mines who are conducting negotiations on their behalf and who said on Tuesday, “Mines and shafts are becoming unviable; people are hungry; children are not going to school; businesses are closing and crime is increasing.”

It is the first time that all three platinum companies have suffered strikes at the same time. Many workers have now gone home, which has affected the turnover of local businesses and many striking miners have had to sell cattle to make up for the lack of wages.

Lonmin has asked its non-striking staff to “take some of their accumulated leave at this time” to “help the survival of the business”, a spokeswoman for the company said on Thursday. Sue Vey told Sapa that “it’s basically for cost-cutting measures across the company. By taking the accumulated leave, the liability of paying for the leave [that is not taken] is cut. They can’t end up claiming, and leave days that are not taken can be carried over to next year.”

A company memorandum was sent to all employees on Tuesday. Written by Ben Magara, it said: “Given the reality of a prolonged strike and AMCU’s unrealistic demands, we have to make tough decisions to preserve and protect the business by reducing costs and conserving cash.”

The unions are asking for monthly wages of the lowest paid workers to be doubled to R12,500 (£702) a month, but the mining companies say this would work out as a 29 per cent increase in their annual costs which is “unaffordable” due to razor thin margins in the sector. The platinum market is currently experiencing very depressed prices, which are 37 per cent below their record highs six years ago, and the platinum companies insist that over half of the platinum operations in South Africa don’t even manage to break even. The Chamber of Mines went back to the miners with an offer of a 9 per cent rise over two years but this was rejected by the miners, who returned with a new proposal of 25 to 35 per cent over four years, but this in turn was rejected by the platinum companies as still “unaffordable.” Negotiations have now been suspended this month due to the lack of a “reasonable settlement zone” between the two sides.

During the negotiations the miners have been represented by the Association of Mineworkers and Construction Union’s treasurer Jimmy Gama. It is the first time that AMCU has been directly involved in wage negotiations having come to prominence during the wildcat strikes of 2012. South Africa’s largest labour grouping COSATU, which includes AMCU’s arch-rival the National Union of Mineworkers, said it supported the call for a “living wage” but accused the striking union of being irresponsible. “We believe that it is irresponsible to take workers on such a long strike where there are no prospects of achieving the demands,” COSATU said in a statement. COSATU also said the government should intervene to resolve the impasse.

Deputy President of South Africa Kgalema Motlanthe is due to meet representatives of the striking miners’ union along with delegates from the Chamber of Mines who are representing the platinum producers, who have been warning for some time that job cuts will be required to modernise an industry which employs over 100,000 people in South Africa. “Sadly, as the industry progresses towards greater mechanisation and higher skills levels, which are aligned with higher earnings and greater productivity, so the number of people employed in the industry will decrease,” they said.

South Africa is home to 80 per cent of the world’s platinum supplies, and this strike has created a 40 per cent decrease in global platinum production. One of the precious metal’s primary uses is in the production of emissions-capping catalytic convertors used in motor vehicles.

“These impacts are not only on the companies, but also on employees, local businesses, suppliers, and on communities. The financial cost – now close to R10bn in revenue lost, and around R4.4bn in earnings lost to employees – does not tell the full story.”

Many mines are now failing into disrepair while not being used, and the loss of earnings in the platinum belt near Johannesburg mean that local communities and businesses are also suffering. Many migrant workers have returned home and crime rates in the area have increased significantly.