South African Platinum Producers To Offer Wage Deal Directly to Strikers

By Alexis Flynn 

LONDON--Talks aimed at ending three months of strikes across South Africa's platinum mining heartland have hit an impasse, after the world's top three producers of the precious metal said Thursday they would bypass the union representing tens of thousands of miners and offer a new wage deal directly to their employees.

"Unfortunately, no resolution has yet been achieved in resolving the three-month strike relating to wages and benefits," Anglo American Platinum Ltd., Impala Platinum Holdings Ltd. and Lonmin PLC said in a joint statement. "The producers have a duty to provide the details of the settlement offer to our employees and will do so forthwith."

Representatives of the Association of Mineworkers and Construction Union weren't immediately available.

While Thursday's move doesn't bring an end to negotiations with the powerful AMCA, it could further damage already fraught relations between management and strike leaders.

However, it also risks adding fresh volatility to a combustible situation, potentially pitting workers who are prepared to return to work against those who want to maintain the picket.

"Our fear, as a government, is that the chances of violence are more increased," said Thembinkosi Mkalipi, a chief director at the Department of Labour, who has been involved in the talks.

"There are two things at play. How hungry are the miners? Their stomachs will have to determine how loyal they are to AMCU. And how scared are they?" said Mr. Mkalipi.

The companies say the strikes have collectively cost more than a billion dollars in lost production, while the continuing labor turmoil risks widening South Africa's yawning current-account deficit and further harming growth.

All three firms last week united on the eve of the Easter weekend to present above-inflation wage increases of as much as 10% to 80,000 mine workers who have been on strike since January, but AMCU said that offer falls short of their original demand for a basic monthly wage of 12,000 South African rand (about $1,140).

Though bosses and union leaders resumed talks on Tuesday, the two sides still remain at odds.

In an interview last week, AMCU's general secretary, Jeffrey Mphahlele, expressed skepticism at the deal being offered.

"It's not an improved offer," Mr. Mphahlele said. "It's like a rubber band. You can stretch it, but when you let go, it returns to the same shape."

South Africa's platinum mines--and its economy--have been damaged by waves of strikes in recent years, while prices of the metal, used mainly to build emissions-curbing catalytic converters in cars, have risen more than 6% since the beginning of the year.

Deep-set tensions, some linked to grievances from South Africa's apartheid past, lie at the heart of the dispute between Mr. Mphahlele's union and the mining companies.

While the union continues to press for wages that are closer to those paid for similar work in Australia or Canada, the mining industry has balked, saying the demands are unaffordable and couldn't be sustained.

Though the country ordinarily accounts for about 80% of the world's platinum reserves and is its biggest supplier, production of the precious metal has nearly halved as a result of the latest strike.

Anglo American Platinum has warned that if the strikes continue it would consider closing more of its marginal mines.

Earlier on Thursday, Anglo American Chief Executive Mark Cutifani said resolving the strikes was "the most pressing issue facing the company right now."

"We want to see our people back at work," said Mr. Cutifani.

Write to Alexis Flynn at [e-mail]

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