Amplats’ miners head back to work

South African workers offered allowances and salary increases

Mine workers at Anglo American Platinum began returning to work Thursday, marking the end of a wave of wildcat strikes that triggered the biggest crisis in South Africa’s mining sector since the fall of apartheid.

The miners agreed to go back to their jobs after the company, which is the world’s largest platinum producer, offered to pay workers a monthly allowance of R600 or a monthly salary increase of R400. Amplats also promised to pay R4,500 in one-off “allowances” to the miners once they returned to work.

The company said workers had returned across its operations in Rustenburg, where the unrest started, and at two mine complexes in Limpopo province.

The more than eight-week strike affected about 40 per cent of Amplats’ operations and has cost it more than 167,000 platinum ounces in lost production and more than R2.4bn ($269m) in revenue. Production is expected to resume in about a week after safety measures and training is carried out.

The company, which was conducting a review of its operations before the unrest began, has repeatedly said that its shafts at Rustenburg are already operating on tight margins and warned about placing additional cost burdens on the mines. Amplats, part of Anglo American, has said its earnings for the financial year could be down 20 per cent compared with the previous 12-month period.

Initially, it adopted a tough stance with miners who have been demanding higher salaries and was the first company to follow through with threats of dismissals, sacking 12,000 strikers last month – a fifth of its workforce.

But as workers at other mines returned to work, Amplats followed others in offering financial incentives for its employees to return. The company has said
it will reinstate the dismissed miners that return to work.

The unrest began in South Africa’s rich platinum belt in August at mines operated by Lonmin, the London-listed company, and escalated after police shot and killed 34 striking miners. The wildcat strikes spread to other platinum producers as well as gold companies, sucking in more than 100,000 miners.

The Treasury has estimated that the industrial action has cost R10.1bn in lost production and shaved 0.5 per cent off South Africa’s economic growth for the year.

Industry executives have also warned that in spite of the return of workers, the sector’s problems are far from over amid warnings of the closure of marginal mines and job losses.

The environment also remains volatile. Industrial action exposed the fragility of collective bargaining as miners eschewed unions and sought to represent themselves.

Xstrata, the mining company which owns 25 per cent of Lonmin, on Thursday said that it would participate in a $817m rights issue launched by the London-listed platinum company.

The news will be a boost for Lonmin, which has been under financial pressure for months and last week said it had turned down a reverse takeover bid by Xstrata. It also rejected a second proposal in which the latter said it would support a rights issue on condition that Lonmin’s executive management was changed and replaced with Xstrata personnel.

Lonmin, which posted a loss before tax of $698m in the financial year to September, announced last week that it was launching the $817m rights issue which is underwritten by banks. The group will hold its annual general meeting on Monday at which shareholders will vote on the rights issue.

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