Written by Rohit Ravikumar, Global Economic Intersection Associate
The platinum belt strike in South Africa have raised the value of platinum to its highest level in months, with signs pointing to this trend continuing. The strikes in South Africa began on January 23 and encompass tens of thousands of workers.
The largest producer of platinum in the world, producing 53% of the world's platinum output last year, South Africa has lost 8.8 billion rand ($820 million) and taken 440,000 ounces of platinum out of production. A decrease in supply, coupled with fear that the crisis will continue, has raised the price of platinum from $1,385/oz in late January to $1,485 today, higher than since last August.
Most labor disputes in South Africa are resolved within six weeks, as unions do not provide strike funds to support their workers through a strike. This strike, orchestrated by the Association of Mineworkers and Construction Union (AMCU) against Lonmin, Impala Platinum, and Anglo American Platinum, the world's top platinum producers, has gone on for over seven weeks, with many workers departing for rural homes to support them over a long duration.
AMCU requests from the platinum producers a R12,500 monthly wage, arguing that mineworkers have seen minimal wage growth over the past 20 years. The producers counter that a R12,500 basic wage over four years would amount to an increase of over 150%, simply not affordable; Impala has argued that such a raise would force a closure of their entire Rustenburg mine. Their counteroffer of a 9% raise was rejected.
South Africa's labor mediator, the Commission for Conciliation, Mediation, and Arbitration (CCMA), backed away from the wage talks on the sixth week, saying the two sides needed time "to reflect on their respective positions". Since their decision, the Confederation of South African Trade Unions (COSATU) and several high profile union leaders have urged AMCU, employers and policemen to break the strike. Workers' Association Union (WAU) president Adam Selaledi stated:
The current unions are not adequately addressing the needs of the workers. The current strike in the platinum mining industry will lead to massive job losses and the closure of the mines.
Former AMCU member Gadafi Mdoda added:
We're still saying the demand is appropriate. But it was not the right time to go on strike... let's suspend the strike so we can plan properly.
No further progress on negotiations has been made.