South Africa's AMCU says its members agreed to a wage settlement that will end the country's longest-ever strike which has cost the mining industry 1.1M oz. in lost platinum production and helped shrink the country's economy by 0.6% in Q1 from a year earlier.
The world's three-biggest platinum producers - Amplats (AAUKF, AAUKY), Impala Platinum (IMPUY) and Lonmin (LNMIF) - say they each lost roughly a third of their annual production, and analysts say it will take at least three months to get production back to pre-strike levels after mines have been mostly idle for the past several months.
Platinum prices fell 1.1% to $1,437.70/oz. on the news.
South Africa's platinum miners say the industry's main labor union has made new demands that go beyond a preliminary accord struck last week, which may delay an apparent agreement to end the five-month strike by 70K-plus mine workers.
AMCU, which has led the strike, now wants the new wage agreement to run for three years instead of five, seeks a once-time payment of ~$270 to each worker, and wants miner Lonmin (LNMIF) to rehire 235 workers it recently dismissed for participating in the strike.
Top platinum miner Amplats (AAUKF, AAUKY) and the union are scheduled to meet today to discuss the new demands; Impala Platinum (IMPUY) says some of the new issues raised by the union are "problematic" and that it "could still take some time" to sign a deal.
South Africa’s top platinum companies and the biggest mineworkers union agree on proposals that the labor organization will take to its members in a bid to end a five-month pay strike.
The AMCU union is meeting members at mines today to get their views on the proposal, and the companies - Amplats (AAUKF, AAUKY), Impala Platinum (IMPUY) and Lonmin (LNMIF) - expect a response tomorrow.
More than 70K members of the union have been on strike over pay since Jan. 23, which producers say has cost 22B rand in revenue.
Wage talks between South Africa's AMCU union and major platinum producers end in failure, with the mining minister quitting his mediation role and dashing hopes for an end to the five-month strike.
AMCU has led the strike of more than 70K mineworkers since Jan. 23, asking for monthly wages of the lowest paid underground employees to be more than doubled to 12.5K rand ($1,174) by 2017; the companies offered increases of as much as 10%.
The world's three top platinum producers - Anglo American Platinum (AAUKF, AAUKY), Impala Platinum (IMPUY) and Lonmin (LNMIF) - say they have forfeited earnings of 22B rand and employees have lost 9.6B rand in wages since the strike began.
The news lifted platinum prices higher by ~$15, or 1%, from a session low of $1,436/oz.
South African mining production plunged 24.7% Y/Y in the three months through March, the biggest quarterly drop since Q2 1967, and helping send the country's Q1 GDP down 0.6% Y/Y in its first contraction in five years, the government reports.
A four-month-old miner's strike at South Africa's three biggest platinum producers - Anglo American Platinum (AGPPY), Impala Platinum (IMPUY) and Lonmin (LNMIF) - has cost the companies more than 470K oz. of production in Q1 and 19.8B rand ($1.9B) to date in lost revenue.
A South African labor court judge is now mediating talks between the companies and the miner's union - a step supported by both sides but she can’t impose anything on the parties.
South African platinum miners will continue their strike after workers rejected the latest wage offer from employers, according to the president of the AMCU union that is spearheading the strike.
The world's three largest mining companies - Anglo American Platinum (AGPPY), Impala Platinum (IMPUY) and Lonmin (LNMIF) - had revised their wage offer at the end of April with an above-inflation salary increase of as much as 10%.
The strike has been running for nearly four months and has cut global production of the metal by ~40%; the big three miners are estimated to have lost ~$1.5B so far.
Platinum mining in South Africa has plunged by more than a third since workers went on strike in January to demand higher pay; mining companies had built up their inventories before the strike, but stockpiles have dwindled as the strike reaches its 11th week.
South Africa is the source of roughly 80% of the world's platinum, while Russia is the second largest producer; platinum is used primarily in catalytic converters of diesel-burning vehicles, which are common in Europe.
Metals continue to lead the way down in commodities following the FOMC results and Yellen press conference. Unless something happens to change the Fed's mind, QE will end this fall and rate hikes are starting about one year from today.
Gold -1.4% to $1,322 per ounce - as recently as Monday, the metal was challenging $1,400. Silver -2.6% to $20.28. Copper -2.2% to $2.92 per pound. Platinum -1% to $1,437 per ounce. Palladium -2.1% to $752. WTI crude oil slips another 0.4% to $98.76.
Gold's retreat over the last couple of sessions has wiped out all of March's gain.
Talks resumed today between South Africa's top mineworkers union and the world's top three platinum producers, but with few hopes for a quick resolution to a strike that hit production of the metal given AMCU's uncompromising approach to negotiations and with the two sides far apart over wages.
The delegations for the talks were low level, with no ministers or chief executives from Anglo American Platinum (AGPPY), Impala Platinum (IMPUY, IMPUF) or Lonmin (LNMIF, LNMIY), and without the president of the AMCU union.
South Africa's Association of Mineworkers & Construction Union has started government-brokered pay talks with the world's three largest platinum producers in order to end a strike of up to 100,000 workers.
The strike, which is affecting over half of the world's platinum output, is in its second day and is threatening to turn violent.
The meeting marks the first time that the AMCU has met with Anglo American Platinum (AGPPY), Impala Platinum (IMPUY, IMPUF) and Lonmin (LNMIF, LNMIY) under one roof.
Tens of thousands of platinum workers in South Africa went on strike today to demand higher salaries, and Anglo American Platinum (AGPPY), Impala Platinum (IMPUY, IMPUF) and Lonmin (LNMIF, LNMIY) say mining operations had mostly stopped as a result.
The companies warn that the industry is in a financially fragile state and a new strike will be damaging to both revenue and jobs; this week, Amplats said earnings in 2013 returned to a profit after a loss the previous year but a strike could reverse those gains.
Anglo American Platinum (AGPPY) returned to a profit in 2013 as the platinum sector tentatively picked up after enduring a wave of violent strikes, but the recovery risks being jeopardized by new unrest as miners prepare to lay down tools tomorrow to demand a doubling of their basic salary
Amplats, majority-owned by Anglo American (AAUKY, AAUKF), expects EPS to increase to 480-590 cents from a loss the year before, amid higher sales of platinum and a favorable rand/dollar exchange rate.
Amplats joins Impala (IMPUY, IMPUF) and Lonmin (LNMIF, LNMIY) in warning of the potential damage of a prolonged strike, saying the miners' demands are “unaffordable and unrealistic."
'The gold market is lacking enthusiasm and interest," say UBS's Edel Tully and Joni Teves, noting the metal's failure to respond to the weak payroll data last week. "With hopes of an upside break now dashed, collective sentiment is firmly back in the bearish camp."
The two extrapolate gold's sour mood to platinum: "The early-2014 price rally has now become stale. Platinum seems to be running out of steam around these levels, and spillover weakness from gold would be enough for platinum to give in to the downside from here."
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