New mining minister looks to end South Africa's strike

May 28, 2014

The mining strike in South Africa has stretched 18 weeks and has cost platinum producers about $2 billion in lost production. It is the longest strike in the sector’s history and has contributed to the country's economy contracting in the first quarter for the first time since 2009. Gross domestic product data Tuesday showed that mining output fell the most since 1967.

South Africa's new mining minister Ngoako Ramatlhodi will look to end the strike with meetings with labor unions and the mining companies. 

The Wall Street Journal reported that the world's three biggest platinum producers — Anglo American Platinum Ltd , Impala Platinum Holdings Ltd. and Lonmin PLC — have been engaged in talks with the Association of Mineworkers and Construction Union since last week. Those talks, Ramatlhodi said in an interview with local radio stations, haven't led to a resolution yet. The minister said he would intervene and met with AMCU's leader as well as the company chief executives. He said his department will launch a new task force to try and bring about a negotiated end to the strike. The former minister and deputy president of the country tried similar interventions with limited success, but the companies hope a fresh face will have more luck.

Around 70,000 platinum mine workers have been on strike since the end of January to demand a near tripling of entry level wages to 12,500 rand ($1,196) a month. The companies say they cannot afford to meet the demand, while the union argues that if chief executives can earn many millions of rands a year then they should be able to increase the pay of the workers, many of whom live in shacks without electricity or running water.

As the strike continues, violence and intimidation around the mines has increased. In the past month six people have been killed in the platinum mining belt, and all but one worked at the mines.

"There has been some movement toward meeting one another but we have not arrived there," Ramatlhodi said of the strike talks so far. "I don't have a magic wand. It will require a lot of hard work."

Tuesday's gross domestic product data underlines the need to resolve the strike. South Africa's Reserve Bank lowered its growth outlook for the country earlier this month to 2.1 percent, far below the rate needed to create substantial jobs in a country where about a quarter of the workforce is unemployed. The platinum companies say the length of the strike will make it hard to avoid cutting more jobs when production does eventually restart.
 

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