Losses mount as South Africa faces biggest post-apartheid mine strike

Mon Mar 17, 2014 3:14pm EDT
 
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By Ed Stoddard and Zandi Shabalala

JOHANNESBURG (Reuters) - With no end in sight, South Africa's platinum strike is set to become the biggest single stoppage to hit the country's mining sector since the end of apartheid in 1994, and now threatens the viability of an industry already in deep trouble.

Revenue and production losses look sure to top those experienced in 2012, when a wave of rolling, wildcat strikes pushed Anglo American Platinum into the red and forced Lonmin into a rights issue to shore up its finances.

Shareholders are concerned at the prospect of steeper losses this time with almost half of mine shafts already unprofitable.

Entering its eighth week, the wage strike by the Association of Mineworkers and Construction Union (AMCU) against the world's top three platinum producers - Amplats, Lonmin and Impala Platinum - is likely to drag on for several more weeks, with both sides poles apart and neither blinking.

As costs mount, the sheer scale of the strike is also an unwelcome development for President Jacob Zuma and the ruling African National Congress, with a general election on May 7.

The current strike has so far taken around 440,000 ounces of platinum out of production, as 44 working days have been lost and the daily losses are almost 10,000 ounces.

Amplats, Implats and Lonmin collectively lost around 544,000 ounces to the wildcat strikes in 2012, according to estimates and data provided to Reuters on Monday by the companies.

But there was no single stoppage in 2012 - the big three platinum producers were hit at different times, in periodic eruptions - and the current strike will pass the 544,000 ounce mark if it continues another 11 working days.   Continued...

 
Miners gather at Wonderkop stadium outside the Lonmin mine in Rustenburg, northwest of Johannesburg January 30, 2014. REUTERS/Siphiwe Sibeko