Miners at two more South African platinum sites make pay demands

22nd Aug 2012 14:04

Workers at two further platinum mines in South Africa are demanding pay rises, just days after an industrial dispute at Lonmin's Marikana mine turned violent, leaving over 30 people dead.Rock drill operators at Royal Bafokeng's BRPM mine went on strike on Tuesday night, with nobody reporting for work at either of the mine's two shafts, according to South Africa's Business Daily.Steve Phiri, Chief Executive of Royal Bafokeng, confirmed the mine workers had demanded a monthly salary of R12,500 (around £950). This is the same wage demand that has been put by strikers at Lonmin, who have been on strike since last week.Miners at the Thembelani mine near Rustenburg, which is run by the world's biggest platinum producer Anglo Platinum, are also in dispute with management.Company spokesman, Mpumi Sithole, said a demand for higher pay had been handed in by workers, rather than by union representatives, with a Friday ultimatum attached.Mineweb, an online South African news service for the industry, said called the new wage demands "a potentially ominous development".It said it was particularly worrying that miners were bypassing the National Union of Mine Workers, "suggesting a total lack of trust in the traditional mining union setup".ViolenceMore than 30 people were killed on Thursday at the Lonmin's mine, when police opened fire on strikers armed with clubs and machetes.A pay dispute at the mine has been exacerbated by tensions between rival trade unions, the National Union of Mineworkers and the recently-formed Association of Mineworkers and Construction Union.Lonmin Chairman Roger Phillimore said the violence between competing labour factions was "a public order rather than labour relations associated matter".The firm initially imposed an ultimatum on striking workers to return to work on Tuesday or face dismissal, but has since lifted the order. The firm said it had made no decisions about a new deadline after only a third of scheduled workers appeared for the early shift on Tuesday morning.Investment threatWhen the violence began, Andrew Joannou, the Chief Investment Officer at Afena Capital, said it could discourage foreign investors in the country. South Africa holds around 80% of the world's known platinum reserves."When it starts getting attention in the international news, it will make offshore investors even more nervous, not just for Lonmin and the platinum industry as a whole, but they will also worry about whether it could spread into the other sectors, like gold," Joannou said."We haven't seen it yet, but it could happen. "With the rand platinum group metals basket price so low, any additional production cuts or cost increases will have a significant impact," he added.The unrest has hit Lonmin hard financially, with the firm saying that in light of the events and the impact on production, its debt covenants will likely be breached. It is now "reviewing all the options available to strengthen its financial structure, including possible access to the equity capital markets." Credit Suisse has trimmed its target price for troubled platinum miner and reiterated its 'underperform' rating on the stock."The company needs to raise cash given the likely trajectory of earnings over the next six months," the broker said.Global concernsHowever, despite regular flare ups in industrial relations between mining firms and their staff across Southern Africa, it is the state of the world economy that seems to be weighing more heavily on investors' minds when it comes to the mining industry.BHP Billiton fell on Wednesday after saying weakness in commodity markets and industry-wide cost pressures resulted in earnings declining in the first half. The group also decided against spending up to $30bn on a uranium and copper mine extension in South Australia. Xstrata and Rio Tinto have also confirmed that faltering demand has weighed heavily on profits over the past year. Almost nine out of 10 mining firms missed second quarter earnings expectations, according to Thomson Reuters Starmine data.