And this week, the fireworks began in this brewing battle.
On Monday, the Association of Mineworkers and Construction Union (Amcu) said it has formally filed disputes against South Africa’s three largest platinum miners. Taking the firms to task over their failure to comply with the requested wage increases.
This declaration now triggers an internal dispute resolution process. With the union saying it plans to meet Anglo American Platinum and Impala Platinum this week — with major producer Lonmin to follow.
These discussions are expected to last four weeks. After which the union can officially refer the dispute to South Africa’s Commission for Conciliation, Mediation and Arbitration to be settled externally.
If the wage dispute does indeed go to formal arbitration, it would be a major escalation in this critical matter. Raising the possibility that the Commission could decide in the union’s favour — and saddle mining companies with increased labor costs.
For their part, miners say they simply can’t afford higher wages. Especially with lower platinum prices and rising capital costs at South Africa’s mines pinching profits.
Whatever the decision here, there is going to be major friction. A positive outcome for workers would mean less cash for project investment, while a decision in favour of the mining companies is likely to cause strife with the unions. Perhaps leading to strike action.
This all comes as more and more alarm bells are sounding across South Africa’s platinum industry. Just this week, Anglo American’s Mogalakwena mine was completely shut down by protests from the local community. On the same day that Impala Platinum CEO Terence Goodlace told his company’s investors that South African platinum production is “going to drop off a cliff” due to under-investment.
Watch for news on the negotiations between the Amcu and miners throughout September. And for a possible arbitration request toward the end of the month, which could signal big issues looming.