JOHANNESBURG/LONDON Feb 18 (Reuters) – A face-off between platinum producers and striking miners in South Africa has had negligible impact on metals prices so far, but that is likely to change if the action grinds on past the end of the month and stocks are drawn down.
The strike by South Africa’s Association of Mineworkers and Construction Union (AMCU) against the world’s top three platinum mining companies has so far failed to ruffle traders. Platinum prices traded at around $1,422 an ounce on Tuesday, about 2 percent below its levels on the eve of the industrial action.
This is partly because the mining industry is better prepared than in 2012, when it was swept by a wave of rolling and violent illegal strikes. A spokesman for major producer Impala Platinum said last month it had enough in inventories to supply clients for six to eight weeks.
The strike began over three weeks ago when AMCU members downed tools at Anglo American Platinum, Impala Platinum and Lonmin. The two sides remain poles apart on the issue of wages, suggesting a prolonged stoppage.
AMCU is demanding that basic pay be more than doubled to 12,500 rand ($1,100) a month under the battle cry of a “living wage”, which has been used for decades by an increasingly restive black workforce.
The typical South African mineworker has on average of eight dependents and often hails from a subsistence farming background far from the shafts.
This fuels their demands but also means they will find it difficult to hold out, while the companies can ride things out much longer.
“The platinum producers’ balance sheets are not great but at least they have balance sheets. The AMCU guys have zero balance sheets,” said Peter Major, a fund manager with Cape Town-based Cadiz.
AMCU is also known, however, for its uncompromising stance on wage talks. It emerged as the dominant union on South Africa’s platinum belt in 2012 after it wrested tens of thousands of disgruntled members from the National Union of Mineworkers in a turf war in which dozens were killed.
“How long will the strike take? The struggle is the struggle at the end of the day,” Mathunjwa told a Cape Town Press Club luncheon earlier this month. “We will continue.”
Companies say they can ill afford big hikes as they confront rising costs and depressed prices. They have offered increases of up to 9 percent against an inflation rate of 5.4 percent.
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