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Platinum Crisis Averted As Miners Strike Deal With Unions

Platinum melting

Major development in the global platinum sector this week. With miners in the world’s top-producing nation South Africa apparently having reached a deal with mineworkers to avert major strike action.

Reuters reported last Thursday that South Africa’s top platinum miner Anglo American Platinum (Amplats) has struck a new labor agreement with workers. With the news service obtaining a draft of the contract now being put before unions at the company’s mines.

A new contract with mineworkers has been a major issue looming over South Africa’s platinum sector this year. With major unions like the Association of Mineworkers and Construction Union (Amcu) having tabled demands for wage increases up to 47%.

Mining companies in return insisted they can’t pay increased wages right now. With cash flow from South African mines pinched by lower platinum prices as well as rising capital costs.

That standoff led the Amcu to file a formal dispute against miners in early September. Asking the South African government to step in and mediate the labor negotiations.

At that point it looked like things could get serious — perhaps culminating in an extended labor action like South Africa’s miners saw in 2014.

But this week’s news shows the crisis has apparently been averted for now.

According to the document viewed by Reuters, Amplats is offering miners a modest raise of 7%. Coming over a three-year period — meaning the yearly impact will only be a few percentage points.

Such a figure would be a win for mining firms. Being significantly below the double-digit raises demanded by unions earlier this year.

Importantly, the draft agreement also contains a “peace obligation”, restricting future strike action from unions. With the document specifying that no unionized workers “shall be entitled to embark upon any industrial action whatsoever.”

If completed, this would be a big step toward preventing supply disruptions from South Africa over the next few years. Sources told Reuters that platinum major Impala has tabled a similar offer to its workers — watch to see if the deal is accepted by union leaders.

Here’s to a platinum solution.

By Dave Forest

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