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.
Negotiations between Anglo American Platinum (AGPPY), Impala Platinum (IMPUY, IMPUF) and Lonmin (LNMIF, LNMIY) and the AMCU union are expected to resume for three days beginning Jan. 27; platinum prices pared declines as prospects of a quick end to the walkout faded.
At least 70K employees began their strike yesterday in the country that is home to 70% of global production; the mining companies estimate the strike will cost ~$13M/day in lost revenue.
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."
Lonmin says it rejected a reverse takeover offer from Xstrata, and instead will move ahead with an $817M rights issue to repair its strike-strained balance sheet. Analysts had expected the platinum producer to raise more money to help it meet production targets, but instead it said it is focused on reducing costs, streamlining management and cutting debt.
Platinum futures take a breather after a report that Lonmin workers in South Africa have accepted the company's pay offer and will return to work. Prices in the past 30 trading days have climbed from under $1,500/oz. to above $1,700 before a sudden drop today took prices below $1,620 from over $1,670.
Lonmin signs an agreement to end a four-week strike at its Marikana platinum mine, but key parties didn't participate, undermining the government-backed attempt to end a dispute that has left 44 people dead. Since the dispute began, concerns over supply have pushed spot platinum prices up 14% to a four-and-a-half-month high of $1,587/oz.
Platinum prices jump to four-month highs as spreading labor unrest in South Africa raises the possibility that a further 40% of world production of the metal could be affected. Fears that a two-week standoff at Lonmin's Marikana mine could spread to top platinum producer Anglo-American grow, as Amplats workers have become the latest group of platinum miners to demand higher wages.