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South Africa Braces For Miners Strikes

posted 20 Jan 2014, 08:52 by Mpelembe Admin   [ updated 20 Jan 2014, 08:52 ]

 

Reuters Business Report - Just months after the last bout of industrial action and there's more brewing.

South Africa's biggest mining union, the AMCU, has voted to strike for better pay.

ASSOCIATION OF MINEWORKERS AND CONSTRUCTION UNION (AMCU) PRESIDENT, JOSEPH MATHUNJWA 

"As per the mandate the strike will commence on the first shift of Thursday."

The move could hit half the world's platinum output as those affected include Amplats, Lonmin and Impala Platinum.

That's a cost South Africa's finance minister says the country can ill afford.

Bernard Dahdah from Natixis agrees.

Bernard Dahdah, Precious Metals Analyst, Natixis, 

"You have 70% of the world's production coming from South Africa, mainly concentrated by those top three producers. In terms of costs they're starting to suffer quite a bit. Current prices is close to the cash cost of production so producers at the levels below the levels of 14,000 rand an ounce are loss making and we've seen that level hitting a few times."

Last year a wave of strikes - many violent and some deadly - pushed economic growth down to just 2 percent.

That triggered downgrades from the three main credit rating agencies.

And disrupted President Jacob Zuma's efforts to create jobs ahead of this year's elections.

His African National Congress had promised to pull millions of blacks out of poverty.

But companies say they can't afford to pay higher wages when they're battling soaring energy costs and depressed platinum prices.

Bernard Dahdah, Precious Metals Analyst, Natixis, 

"Europe was the biggest source of demand for platinum. Most of that platinum was going into European cars autocatalysts. More than 50% of cars run on diesel and cars that run on diesel require a hire content of platinum so with the economic crisis in Europe over the last 2 or 3 years, we've seen a slump in demand."

Simultaneous stoppages at the country's big three producers would certainly hit platinum exports.

And the AMCU is also urging gold companies to walk out too.

It couldn't come at a worse time for South Africa.

New data shows it could have its crown as the continent's biggest economy snatched by oil-richNigeria.


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