New Anglo Platinum wage demand a potentially ominous development
A new pay demand from Anglo American Platinum workers, bypassing the NUM union, is yet another disturbing development in the South African platinum sector.
Posted: Wednesday , 22 Aug 2012
LONDON (Mineweb) -
The latest note from Anglo American Platinum (Amplats) reporting that it has received an unspecified pay increase demand from workers on the world's largest platinum mine is a possibly ominous development for the South African platinum sector. The demand has come from workers directly, rather than through official National Union of Mineworkers (the principal mining union at the mines) channels, and this mirrors the demands at Lonmin's Marikana mine where again no official demands were made to the mine owners via the union.
What is particularly worrying here is that the miners are bypassing the NUM suggesting a total lack of trust in the traditional mining union setup. The NUM appears to be being seen as a vassal of the ruling African National Congress political party - i.e. part of the new South African establishment - where it is beginning to be felt that miner's interests are taking second place to political interests (in this case the preservation of a key part of the South African economy).
By Western standards South African mine pay at the main workforce level is low with the average miner probably earning between $500 to $1000 a month to work in what many outsiders would consider dirty and dangerous conditions. This actually may represent good pay by standards in many other African countries - and also in many Asian ones. Nevertheless this is great fodder for an activist union like the AMCU which can draw comparisons with better paid mineworkers elsewhere and drum up substantial dissatisfaction among the platinum mine workforce.
Some will say that the South African mines can only exist through the utilisation of this ‘cheap' labour. The mines themselves will say that labour is actually the most expensive part of their operating costs and when you have such large workforces - how many mines outside South Africa employ over 20,000 people on a single mining operation? This is very relevant to the mines' profitability - even when metal prices are strong. As we have mentioned before, the narrow reefs being mined in the platinum operations make modern mechanised mining very difficult to instigate - but from a political viewpoint should there be a major move to mechanised mining and thus dramatically cutting the workforce, what would happen to the potentially militant mineworkers thus thrown out of work in a country where there is perhaps already 40% unemployment, or higher, amongst the manual labouring classes? With the ANC -friendly NUM representing the miners this potential problem has been kept fairly well under control, but with the AMCU new kid on the block trying to muscle in on the platinum mines - and surely on the gold mines too - this could lead to huge instability in the South African mining sector with a devastating effect on the South African economy as a whole with metals and minerals sales providing such a large part of the country's export income.
And, if you add political firebrands like former ANC youth leader Julius Malema into the mix the whole situation looks as though it could be set to blow up into a major conflagration. Malema has been a huge proponent of South African resource nationalism and, while his views and his anti-President Zuma stance have made him virtually persona non grata within the ANC mainstream, he does command an important following among the country's rank and file. And Malema was quick off the mark to make his presence felt around the Rustenburg platinum mines.
But added to the potential labour pay demands is the fact that virtually all the South African platinum mines are marginal operations at best at current platinum prices - and many of the ultra-deep gold mines are too, failing a big jump in the gold price. One only has to view the latest quarterly financial statements from the South African gold and platinum miners to see how precarious the situation is at the moment.
With Amplats being the world's largest platinum producer, but struggling financially at the moment, these latest wage demands from the workforce need to be followed closely by the platinum consuming sector. While a majority of analysts still believe the sector will be in surplus this year, after an estimated 400,000 ounce surplus last, the South African platinum miners may have already lost around 300,000 ounces of production so far this year through cutbacks, industrial action and safety stoppages. With Marikana possibly taking weeks, or even months, to get back to normality, and potential disruptions elsewhere, a surplus could very rapidly turn into a deficit. The platinum space needs to be watched very carefully.