Reuters reported that workers at South African platinum mines owned by Anglo American Platinum (LSE:AAL), Impala Platinum (JSE:IMP) and Lonmin (LSE:LMI) cheered as they returned to work this week following the end of a five month strike. As Reuters wrote, the strike has so far cost the companies an estimated over $1 billion in revenues.
As quoted in the publication:
Lonmin had set up huge canvas tents in a nearby stadium where miners underwent medical and other checks. Calling for a “living wage” for its members, many of whom live in poverty, the Association of Mineworkers and Construction Union (AMCU) had demanded an immediate doubling of basic wages to 12,500 rand (£694) a month. In the end, it settled for raises of up to around 20 percent annually. The companies will find even that increase hard to absorb. Around half of the country’s platinum shafts were losing money even before the strike.
Edward Sterck at BMO Capital Markets told Reuters:
The market is probably still underestimating the true cost of the strike on the companies’ balance sheet and the cost of returning operations to production. So until we have got visibility on that I would remain somewhat cautious. The focus for investors will be whether we see any upward movement of the platinum price and also some clarity on what the true cost of the strike has been.