'Mines cannot afford pay rises'

Impala Platinum says they do not have a mandate for wage levels yet.

Impala Platinum says they do not have a mandate for wage levels as yet. Picture: AFP

LONDON - South Africa's mining industry can ill afford to offer wage rises during talks that are about to start with a new and unpredictable union, so it may well face fresh strikes, Impala Platinum said on Friday.

South African mining companies are due to embark on one of their toughest periods of wage talks in the next one or two weeks, with increasingly radicalised unions.

The world's biggest platinum producing country is hoping to avoid the 2012 wildcat strike action that cost billions in lost revenue and production.

Mining companies are hurting from a nearly 20 percent drop in platinum prices in the last two years, as the supply disruptions failed to offset weakness in demand for the metal used chiefly in motor vehicle catalysts.

Workers are hoping the unions can deliver deals like the 11-to-22 percent pay rise Lonmin gave illegal strikers after 34 were shot dead by police at its Marikana mine.

"I don't think we have a mandate yet for wage levels, I just know from the mines' point of view that any kind of increase is going to be difficult to afford," Derek Engelbrecht, Impala's group executive marketing, told Reuters in an interview.

"I think there certainly is potential for further industrial action in the form of strikes," he added.

Over the past year the Association of Mineworkers and Construction Union (AMCU) has poached tens of thousands of members from the once dominant National Union of Mineworkers (NUM), which has been hurt by a view that its leaders had become too close to management.

The AMCU leader, Joseph Mathunjwa, on Friday threatened to bring Africa's biggest economy to a standstill and the rand extended its slide after tumbling to a four-year low against the dollar on Thursday on fears of a strike at Anglo American Platinum (Amplats).

More than 50 people have been killed in more than 12 months of unrest stemming from a turf war between the two unions.

"We are now going into uncharted territory," Engelbrecht said. "We are going to negotiate with a new union that we have never dealt with before on wages, so trying to predict the outcome would be foolhardy."

The negotiations will start against a backdrop of jobs cuts and approaching elections.

Impala is looking at plans to cut capital and operational expenses, including staffing numbers, Engelbracht said.

"The whole thing has been reviewed to try and reduce both absolute and unit costs and improve productivity," he said.

The world's largest platinum miner Amplats plans to cut 6,000 jobs and mothball two unprofitable mines near the platinum belt city of Rustenburg.

However, a protest strike called for Friday by at least two AMCU officials failed to materialise.