Double-digit increases out of question —Amplats

ANGLO American Platinum (Amplats) will not pay double-digit wage increases because it is facing stiff headwinds from soaring costs, weak platinum prices and sluggish productivity, CEO Chris Griffith said yesterday.

Amplats, the world’s largest producer of platinum, has held six meetings with its largest union, the Association of Mineworkers and Construction Union (Amcu), which is demanding a basic wage of R12,500 a month for the lowest-paid workers. This would be an effective 100% increase. Amplats has offered a 6% increase.

Amplats and Amcu are in an internal dispute-resolution process before calling in the Commission for Conciliation, Mediation and Arbitration.

Impala Platinum (Implats), the world’s number two producer, has reached deadlock with Amcu at its operations during wage talks.

“No amount of pressure, whether it’s strikes or any other kind of pressure, makes the economic reality facing the company go away,” Mr Griffith said.

“Half of platinum companies are in a loss-making position. The company cannot agree to unreasonable wage demands. Certainly a doubledigit wage demand will be seen as unreasonable.” The platinum price, which started the year at $1,500/oz before rising to $1,600, has fallen to $1,400/oz.

“This is a time for reasonable conversations to take place, acknowl- edging this is a very difficult time for our employees in trying to make ends meet,” Mr Griffith said.

The gold sector had agreed to wage increases of 8%, two percentage points above inflation. “It was a reasonable settlement … there’ve been a number of settlements around that area and the reason for that is because it’s a reasonable expectation,” he said.

Amplats is undertaking a major restructuring of its business to cope with adverse economic and operating conditions. While it is not retrenching workers, it has made hefty reductions in its workforce at Rustenburg, where it is shutting three mines that were operating at a loss in an oversupplied market.

The restructuring will cut production capacity by 350,000oz in the medium term, giving the company a baseline production of between 2.2million and 2.4-million ounces. Amplats lost 44,000oz of platinum production in a two-week strike as Amcu contested the restructuring plans. It drew down on inventory to meet its contractual obligations, and will likely draw down further if there is a strike over wages.

The platinum sector tried hard to set up a centralised bargaining forum for this year’s wage talks but Amcu would not agree to the structure, preferring to negotiate with individual companies in its new role as the sector’s dominant union.

Analysts say Amcu has made promises to its new members and has been unrelenting on its stance on wages, leaving it little room for retreat without losing face.