When the world’s biggest platinum miners sit down with labor unions this month to negotiate a three-year wage deal, it could prove an early test of Cyril Ramaphosa’s new presidency in South Africa.
An amicable outcome will bolster Ramaphosa — the former mine union leader and one-time platinum company investor — as he seeks to lure foreign investors. However, tensions are fraught on both sides and there are fears the labor unions will go on strike, which could send platinum prices soaring.
“Ramaphosa’s key priority is to send a positive signal on reforming the economy, but there will be high levels of instability after the election,” said Andre Duvenhage, professor of politics at North West University. “The platinum belt is probably the most volatile environment in South Africa.” Khusela Diko, a spokeswoman for Ramaphosa, declined to comment.
The industry is bracing for a tough round of talks. The Association of Mineworkers and Construction Union, the largest and most militant labor organization in the sector, is expected to push for higher wages as the industry reaps windfall profits. Across the negotiating table, some producers have accumulated cash to withstand a repeat of the prolonged and violent strike in 2014.
A strike on a similar scale could cut platinum output by as much as 40,000 to 45,000 ounces per week, according to Johnson Matthey Plc, a key maker of catalytic converters for the auto industry. The company is predicting a platinum market deficit this year, even assuming no widespread strike action.
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