Biggest Union Kicks Off Platinum Talks With 48% Wage Demand

(Bloomberg) -- The biggest union in South Africa’s platinum industry demanded wage increases of as much as 48% from producers in the world’s top supplier of the metal, setting the stage for a tough fight in upcoming pay talks.

• The Association of Mineworkers and Construction Union wants minimum basic pay of 17,000 rand ($1,146) a month, President Joseph Mathunjwa said Friday. That compares with about 11,500 rand currently earned by the lowest-paid workers.

Key Insights

• The opening salvo -- issued to companies including Anglo American Platinum Ltd., Sibanye Gold Ltd., and Impala Platinum Holdings Ltd. -- represents a substantial step up from the labor group’s years-long rallying cry for “a living wage” of at least 12,500 rand a month. That minimum still hasn’t been achieved at all producers.
• The union wants companies to share more of their profits following rallies in the prices of palladium and rhodium, which are dug up alongside platinum. A weaker rand has also boosted miners’ earnings.
• Metal and mining investors will be watching the negotiations closely for any potential strike. The militant labor organization held the longest platinum mining strike in the country in 2014.
• While today’s demand looks high, it’s not necessarily a harbinger of the final outcome as South African unions often start off with big asks. In the last wage round, AMCU accepted an increase of 12.5% for the lowest-paid workers, after initially demanding a 47% increment.

Market Reaction

• The FTSE/JSE Africa Platinum Mining Index pared some of its earlier gains. Precious metals prices are rallying Friday, with gold hitting a 14-month high and palladium reaching its highest since late March.
• "I don’t believe these type of demands are affordable for the industry and would put its sustainability at risk, so it’s unlikely that the PGM producers would accede to these demands," said Arnold Van Graan, an analyst at Nedcor Securities Ltd.

Read More

• World’s Top Platinum Miners Brace for Hefty Wage Demands
• Platinum Miners Brace for Labor Clash in New Ramaphosa Test
• South Africa’s Firebrand Mine Unionist Is Headed for a Showdown

--With assistance from Elena Mazneva.

To contact the reporter on this story: Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net

To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net, Liezel Hill, Dylan Griffiths

©2019 Bloomberg L.P.