24 April 2019

South Africa: After a Bruising Battle in the Gold Sector, Tense Wage Negotiations Loom in the Platinum Space

analysis

For the militant AMCU union, smarting from a disastrous five-month strike at Sibanye-Stillwater's gold mines that achieved nothing beyond making its members poorer, the stakes are high in pending wage talks. Amcu battered its way on to the platinum belt seven years ago in part because it was able to take advantage of platinum's company-by-company approach to wage negotiations. That is no longer an advantage. Each company is going into the talks from a renewed position of strength.

After years of bleeding cash in the face of depressed prices, soaring costs, and frequent eruptions of community and labour unrest, South Africa's platinum sector has turned a corner: Some companies are making money again -- lots of it -- and are rewarding investors with dividends.

That may be a red rag for unions in upcoming wage talks, but they will charge it at their peril. On the platinum belt, capital has the upper hand over labour and it also has space for olive branches and compromise.

For starters, the industry can probably afford, for the first time in years, above-inflation wage hikes. Such increases in the past helped push many mines into the red. But current inflation rates are low while...

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