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Amcu lukewarm over new offer by platinum miners

25 april 2014

Negotiations between strike-hit platinum producers and the Association of Mineworkers and Construction Union (Amcu) over the former’s revised wage offer concluded on Tuesday with no sign that the union was in a hurry to take it to its members, bdlive.o.za reported.
The new offer still falls short of Amcu’s demand of a basic salary increase to R12,500 a month over four years, while cash allowances, such as housing and holiday pay, would remain frozen.
CEOs of Anglo American Platinum (Amplats), Impala Platinum (Implats) and Lonmin, the three largest producers, met Amcu leadership on Tuesday to discuss their offer that would see "cash remuneration" for entry-level underground workers reach R12,500 over five years.
It is understood that Amcu’s national leadership has not yet met to discuss the offer ahead of convening mass meetings with members. The offer came on the eve of the Easter long weekend, before which the union spent millions busing members home.
Under the new offer, underground workers would see pay increases ranging between 7.5% and 10% over five years. The previous offer proposed between 7.5% and 9% over three years.
Amplats and Implats said last week they could "ill afford the revised settlement offer (as) labour costs account for approximately 55% and 60%" of costs. The miners said Amcu’s demands would mean unsustainable increases in costs that would be "catastrophic" for the industry.
The cost of the strike has exceeded R20bn, including R6.3bn in lost wages for employees and R14.2bn in revenue for miners, responsible for 40% of global platinum production.
Implats spokesman Johan Theron said there had not been any formal feedback fr om Amcu by Tuesday evening. But the resumption of negotiations was an encouraging sign.
Hanre Rossouw, Investec Asset Management’s head of commodities, remained pessimistic. "I don’t think we’ve bridged that gap between basic pay and guaranteed cash components," he said.
The strike could last until after the May 7 election. "For Amcu, if there’s any political platform that they want to use, it would be senseless to give it up before the elections," Mr Rossouw said.
The platinum producers have repeatedly warned that a protracted strike could put more pressure on marginal shafts to close. This would likely cause further labour instability down the line.
Amcu has vowed to immediately down tools at all three producers if any one company cuts jobs after the settlement.
Producers have already confirmed that the strike would accelerate mechanisation in the sector. In addition, Anglo American CEO Mark Cutifani said recently that the group was seeking a buyer for its Rustenburg mines.
Last month, executives from Implats said mechanisation of the company’s Leeuwkop project would allow it to cut the workers it needed to between 2,000 and 3,000 — from 10,000. The miner already has some mechanised operations.
Implats group executive of growth projects Gerhard Potgieter said labour had "outpriced itself" over the past decade. Wage increases over the period pointed to a future wh ere labour-intensive operations were no longer economically feasible as compared with mechanised ones.
Adcorp labour economist Loane Sharp said on Tuesday higher prices for unskilled labour would be to the benefit of Amcu’s core membership of more experienced mine workers.
"Amcu’s ulterior motive is to price entry-level workers out of the market in order to reduce competition for older, more experienced skilled workers," he said.
Economist Dawie Roodt said increasing mechanisation of the mining sector, along with job losses, was inevitable because of the growing importance of technology as a productivity driver in virtually all industries.