It’s crunch time for global platinum. With events kicking off this week that could radically change the outlook for supply — and prices — over the coming weeks and months.
That critical happening is wage negotiations between South Africa’s mineworkers and the world’s biggest platinum producing companies. Which got underway Tuesday — with some abrupt demands from the country’s largest union.
The Association of Mineworkers and Construction Union (Amcu) sat down with miners Lonmin Plc and Impala Platinum. And formally tabled a demand for wage increases to 12,500 rand ($875) per month for the lowest-paid employees in the union.
That amount represents a significant shot across the bow from the union — amounting to a 47% pay raise for some entry-level miners. Overall, the demand is a 39% rise from the average 9,000 rand per month that the lowest-paid levels of the workforce currently receive.
And it’s not just the lower end where the Amcu is seeking increased compensation. With the union also saying it wants a 15% pay increase for highly-skilled workers within its ranks.
Mining companies have said they will resist these increases. With such a rise in labor costs seen as untenable amid the current price downturn in the global platinum sector.
All of which sets the stage for some tense negotiations over the coming days. With the potential to create labor action if the union’s demands aren’t fully met.
This is exactly the same situation that led to a five-month strike that near-idled South Africa’s platinum production in 2014 — when the most recent round of wage talks was carried out. And if a similar outcome does materialize this time, it could light a fire under platinum prices given that South Africa produces 70% of worldwide supply.
Watch for breaking news on mining companies’ response to the pay demands — with Lonmin and the Amcu scheduled to sit down today for further talks.
Here’s to a tense standoff,