December 2, 2013 / 6:28 PM / 5 years ago

Ivanhoe plans to pay much higher wages to South African miners

LONDON (Reuters) - Canada-listed Ivanhoe Mines (IVN.TO) plans to pay much higher wages to South African miners in its platinum, gold and copper project than prevailing levels, which company founder Robert Friedland said are unsustainably low.

Wage disputes are a sensitive issue in South Africa, where violence and labor unrest over miners’ pay left dozens dead last year.

Ivanhoe will pay workers “an order of magnitude greater than the current wage” at its Platreef project in South Africa, said Friedland, executive chairman of the Africa-focused mining firm.

The platinum industry is extremely labor-intensive and attempts to automate it have had little success so far. But Ivanhoe’s Platreef mine is more spacious than others and is expected to be the first fully mechanized platinum site.

“In a platinum mine in South Africa today, you have to crawl on your hands and knees on that broken rock for several hundred meters to get to the working phase,” Friedland told the MINEAfrica conference in London on Monday.

“It’s pretty claustrophobic, the men are working with muscle power, they are getting silicosis, they are breathing what they are drilling and they are tired of doing it for $12 a day. I don’t think they are going to do it for much longer, and I don’t think they should.”

Negotiations among mining companies in South Africa and the workforce are currently underway, while falling metals prices in the past year have dented companies’ profits.

The Platreef project is 90 percent owned by Ivanhoe and 10 percent by a consortium of Japanese companies. When it starts production, workers will be driving air-conditioned equipment, Friedland said.

The Chicago-born billionaire is known for his flamboyance as well as for his success in finding some of the world’s biggest deposits including the Voisey Bay nickel deposit in Canada and Mongolia’s Oyu Tolgoi copper and gold deposit.

The public is increasingly attentive to the ethical issues surrounding product-supply chains, Friedland said, and consumers’ growing focus on ethics will also drive the industry to pay higher wages.

“You have heard of blood diamonds for example, or Apple getting criticized for what people get paid, or you see Gap stores get worried for what people get paid in Bangladesh for sewing your clothing. Similarly it is just not viable to pay these workers $12 a day,” he said.

Ivanhoe Mines, formerly known as Ivanplats, also owns the high-grade Kamoa copper deposit and the Kipushi zinc and copper asset in Congo.

Editing by Jane Baird

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