South Africa’s platinum miners battling to stand still

Apart from listed uranium stocks, somewhat battered by the disaster at Fukushima, platinum stocks are the worst-performing among global mining subsectors, over the past 12-months. While Russia, thanks to Norilsk, ranks as the world’s No 1 palladium producer, South Africa tops in the rankings for platinum and rhodium.

Platinum prices recovered strongly from below USD 1,000/ounce at the end of 2008, and currently trade close to USD 1,800/ounce. But just how much of this is making its way to miners’ bottom lines may explain why platinum stocks seem so out of fashion.

A number of the headwinds can be identified in recent issues in and around Eastern Platinum (listed in Toronto, London and Johannesburg). The stock has taken particular price punishment over the past week, first on the back of a violent strike at its Crocodile River mine, and then on lacklustre results published on Thursday.

The week saw Eastplats publish a long and detailed account of the strike action, which kicked off on 5 May when members of the National Union of Mineworkers (NUM) rejected the most recent revised wage offer from management. South Africa has been noted for some years for pay rises well above inflation rates, stemming mainly from militant union conduct, and a tolerant political climate. At Crocodile River, the atmosphere was further heated by the lead up to next week’s national municipal elections.

On Friday 6 May, at Crocodile River, mine vehicles were driven by employees through the security gate to the Zandfontein Mine. There was damage to mine property, and so-called unprotected industrial action started up. Mine services at both Zandfontein and Maroelabult underground mines were damaged; management ordered evacuation.

Around 180 workers then unlawfully occupied the mines. Then the chaos really set in. Days later, NUM invited the Congress of South African Trade Unions (Cosatu) to assist in negotiations with the instigators of the illegal industrial action. Eventually the illegal occupiers vacated the mine.

On Saturday 7 May, management established that underground electrical and pumping equipment had been sabotaged. This caused flooding, along with damage to the ventilation system.  The Department of Mineral Resources (DMR), which is wont to shut mines down on a whim, rushed in to safety audits. NUM was told that all employees involved in the illegal occupation and other unlawful acts were suspended pending a full investigation. No-one has yet been fired.

Crocodile River slowly resumed operations and the mine concentrator continues to operate. But unprotected industrial action continued, including an unlawful blockade at the mine entrance, aimed at intimidating and preventing non-striking employees from going to work.

The situation has been inflamed by accusations made by Cosatu that Crocodile River “exploits” its workers, has a “racist attitude” towards its workers, participates in “modern day slavery and human trafficking”, and discriminates against females with respect to maternity leave.

This entry was posted in resistance and tagged , , , , , , . Bookmark the permalink.