Strikes hurting South African platinum production

South African mining company Implats has had to completely halt operations at its Rustenburg mine, located northwest of Johannesburg. According to the company's spokeswoman, these halts are caused by illegal strike activities, and are resulting in a production loss of 3,000 ounces of platinum a day. The strikes have been going on since mid-January.
The strikes at the Rustenburg mine have been declared illegal by a labour court. Encouraged by this ruling, at the end of January Implats dismissed 5,000 of its striking workers without notice. The National Union of Mineworkers (NUM) announced that it was in a difficult position as its official representatives were struggling to control angry workers at Rustenburg. Last October the NUM and Implats' management negotiated wage increases to be implemented over the coming two years. According to this deal, during the first year employees holding middle and higher management positions would see their wages increase by 10%, while employees holding lower positions would enjoy an 8.5% increase. In the second year employees holding higher positions would see their wages increase another 10%, and employees in middle and lower positions a 9% and 8% respectively.

Implats has approximately 50,000 employees. The conflict started when 5,000 workers operating special drilling machines were left out of this deal to increase pay by 18% over two years. In mid January these workers declared a strike. Implats then filed a lawsuit which declared this strike illegal – and the courts ruled in favour of Implats. During 2010 Implats produced a total of 3.69 million ounces of PGMs (platinum group metals). This Monday the strikes were again supported by a large number of workers who, despite having their wages raised, are also demanding improved working conditions and additional benefits. As a consequence, yesterday Implats announced that it would dismiss another 13,000 employees. This amounts to a total of 18.000 dismissals, which is half of the Rustenburg mine’s work force.

These developments explain why global investors are increasingly losing interest in South Africa. On Wednesday the NUM accused Implats of being partly responsible for the escalating situation at Rustenburg, as the management broke its word on negotiating additional benefits for its employees. In early January the situation in Zambia also escalated as the Canadian mining company First Quantum Minerals declared that the strikes at its Kansanshi mine, which produces 231,000 tons of copper a year, had been illegal, with workers downing tools in order to demand a doubling of their wages.