(Bloomberg) — When the world’s biggest platinum miners sit down to hammer out a wage deal with one of South Africa’s most militant labor unions this week, they’ll hold two potentially winning cards in reserve: the cash and metal stockpiles to endure a strike.
Those buffers may prove crucial as Anglo American Platinum Ltd., Impala Platinum Holdings Ltd. and Sibanye Gold Ltd. meet with the Association of Mineworkers and Construction Union on successive days from July 9.
While the producers will be conscious that AMCU led the country’s longest ever platinum mining strike in 2014, none can meet its demand for a pay increase of as much as 48% without undermining their businesses.
“Anglo has the balance sheet to withstand” a strike, plus its key operation is more mechanized, said Ben Davis, an analyst at Liberum Capital in London. “Impala and Sibanye are certainly the more exposed, but have the most to lose from large wage increases for the sustainability of their businesses.”
During the 2014 strike, stockpiles of metal concentrates held by the producers were nearly depleted. Should an amicable settlement prove elusive, much will depend on the length of any strike, said James Wellsted, a spokesman for Sibanye, the largest platinum miner. Sibanye has also shored up its cash position ahead of the negotiations, he said.
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