Impala warns of danger of halt to mining operations
A LONG strike in the platinum sector will have “absolutely dire” consequences for the industry, says Terence Goodlace, CEO of Impala Platinum.
More than 70 000 platinum mineworkers downed tools in Rustenburg on January 23.
Goodlace said there would be no need for a CEO at the world’s second-largest platinum mine if the strike continued much longer. If settlement was reached, it would take three to six months to normalise operations as conditions underground became unsafe with no mining taking place, he said.
“If the strike continues for much longer, I fear for the industry. The consequences will be absolutely dire,” Goodlace said. “At a personal level, I’d like employees back at work while the negotiations continue.”
After five weeks of no underground activity, Impala’s inspectors had found that about 16% of the rock panels at its Rustenburg operations might be unsafe to mine.
“The longer it goes on, the more panels are going to be at risk and the longer it will take to build [operations] back up again. Rock is going to fall if you don’t support it and don’t work it,” he said.
No mining was taking place at Impala as it had placed nonstriking workers, about 19% of its Rustenburg workforce, on paid leave to ensure their safety.
The company was the victim of widespread copper theft, which would have significant cost and time implications to get operations back to normal.
“If people steal copper that shuts down fans, allowing gases to build up [underground], you have to be very careful about going back into those areas,” said Goodlace.
Talks with the Association of Mineworkers and Construction Union (Amcu), which is demanding a basic monthly wage of R12 500, will resume tomorrow.
Impala is offering increases of 9% in the first year, 1.8% in second and 7.5% in the third, which will increase entry-level wages from R9 297 a month to R11 746 by the third year. This includes a living-out allowance, medical and retirement contributions and 13th cheque.
This offer would increase the mine’s wage bill by more than R2-billion in the first year, even though the industry reported cash losses of R4.3-billion in 2013, Goodlace said.
“We don’t know what Amcu’s end game is. What we know is that R12 500 as it currently stands is absolutely unobtainable. It will have to happen over a period of time.”
Even without the strike, Impala would “not be in green pastures”, said Albert Minassian, an analyst at Investec.
“They’re under stress still. They’re still trying to get more mine flexibility, more rock face. Market conditions are not great, and there will be damage because of the strike. From a global customer perspective, there is also reputational risk.”
Impala’s revenue rose 9% to R15.1-billion in the six months to December. Profit increased 14% to R808-million.
Despite the improved performance, Impala suspended its interim dividend for the first time in at least 24 years, according to Bloomberg. “I wasn’t expecting that, but with an open-ended strike it is understandable,” said Minassian.
Impala has lost 80 000oz of production to date because of the strike and R1.7-billion in revenue, but is guaranteeing foreign deliveries until the end of March and domestic deliveries until the end of April.
Goodlace said: “We’re doing this in support of beneficiation in this country, to keep people here employed.”
The strike at Impala comes after a lengthy stayaway at its operations at the beginning of 2012, which was negotiated outside formal structures, setting a problematic precedent in the platinum sector.