A five-month strike at the South African operations of major platinum miners Anglo American Platinum (OTCMKTS:AGPPY), Lonmin (LSE:LMI) and Impala Platinum Holdings (OTCMKTS:IMPUY) is “officially over,” Joseph Mathunjwa, leader of the Association of Mineworkers and Construction Union (AMCU), said today.
According to Bloomberg, the deal, which is to be signed tomorrow, “includes annual increases of 1,000 rand a month for the lowest-paid underground workers for the first two years of the agreement and 950 rand in the third year.” Current pay for those workers is between 5,000 and 6,000 rand per month.
Initially, the AMCU had demanded that basic wages be immediately be more than doubled to 12,500 rand a month, Reuters states.
The companies involved in the strike have not yet commented, CBC News notes, but AMCU members are certainly pleased with its resolution. ”[T]ens of thousands of workers packed into Rustenburg’s Royal Bafokeng Stadium” greeted Mathunjwa’s statement with “unrestrained jubilation,” as per Reuters.
Mathunjwa seems happy as well. He told those assembled, “[t]oday we are creating a historic day in the mining sector. The platinum sector will never be the same. What other unions have failed to do over many years, you have achieved in five months.”
That said, it won’t be all sunshine and roses moving forward.
South Africa’s platinum industry is now headed for a “painful restructuring,” Reuters notes, “with job cuts almost inevitable.” Indeed, Elize Strydom, the chief negotiator of the country’s Chamber of Mines, is quoted by Bloomberg as saying, “[t]he hard work starts now. It’s going to take time for production to get to levels prior to the strike. I think we are still going to have to do a lot of work to convince the world and investors that platinum is a good commodity to invest in.”
The good news is that thus far, platinum and palladium prices don’t seem to have been hurt by the announcement. The Wall Street Journal said that platinum for July delivery ended today at $1,456.60 per ounce, down just 0.1 percent, while palladium for September delivery rose 0.1 percent to close at $822.65 per ounce.
Even more encouragingly, the news outlet quotes Bill O’Neill, a principal at Logic Advisors, as saying, “[t]he global demand picture for these metals is still quite excellent, and supplies are low. Longer term, the fundamentals are there for a continued rally.”
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.