South African Minister Says Strikes Under Control

CAPE TOWN--South Africa's mining minister sought to ease investor worry over the country's unstable labor environment on Tuesday, but said companies must do more to transform the sector.

"We have intervened," Minister of Mineral Resources Susan Shabangu said of the government-mediated talks to help end a costly strike currently hitting the platinum companies.

Speaking at the continent's biggest mining event in Cape Town, Ms. Shabangu said that while government helps to "stabilize" the industry, companies too must contribute by carrying out a government-mandated program to transform ownership of mining companies and fund skill training.

The world's three largest platinum producers-- Anglo American Platinum Ltd., Impala Platinum Holdings Ltd. and Lonmin PLC--are trying to end a strike that started Jan. 23 by the dominant union in the sector, the Association of Mineworkers and Construction Union, to demand higher wages. The strike is costing the industry about $18 million a day in lost revenue. A second union, the National Union of Metalworkers, joined the strike on Monday at Anglo American Platinum.

Last week, Lonmin said because of the strike it would may have to lower its production outlook for the year. On Monday, Anglo American Platinum said if the strike lasts for many weeks it could be forced to consider more of its marginal mines.

Mining accounts for 6% of South Africa's gross domestic product and mineral exports make up 60% of its export revenue. Companies have already cut several hundred jobs because of costly strikes and a weakening demand environment in the past two years--a blow to South Africa's high unemployment rate of around 24%.

The workers on strike now are demanding that their employers raise entry-level salaries to 12,500 rand ($1,150) a month from around 5,000 rand. Companies have offered an increase of up to 9%.

If companies agreed to the union demand, that would increase costs by 13 billion rand, Anglo American Platinum said, adding that isn't something the industry can afford right now.

Write to Devon Maylie at [e-mail]

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