- POSTED: 23 Jan 2014 20:57
Workers at South Africa's top three platinum producers downed tools for higher wages on Thursday, as police braced for potential violence and investors braced for more economic turmoil.
RUSTENBURG, South Africa: Workers at South Africa's top three platinum producers downed tools for higher wages on Thursday, as police braced for potential violence and investors braced for more economic turmoil.
Up to 80,000 miners affiliated with the hardline Association of Mineworkers and Construction Union (AMCU) want entry-level wages more than doubled to US$1,150.
Mine owners, facing higher costs and squeezed profits, say that is unaffordable.
Top three companies Anglo-American Platinum (Amplats), Impala Platinum (Implats) and Lonmin confirmed that the strike had begun at their operations in the platinum belt, northwest of Johannesburg.
Amplats spokeswoman Mpumi Sithole said "the company has recorded low attendance" at three major facilities, and that it expects "production to be impacted by the strike action."
Fearing the strike could spark violence in a region where over 40 people were killed during a wildcat strike in 2012, mine owners began shuttering operations on Wednesday night.
Police have stepped up security but also ordered the organisers of the industrial action to "ensure that their strike is peaceful and they adhere to the picketing rules".
In previous strikes, non-union staff and members of rival unions have reported being threatened if they refuse to take part.
Tensions are high, and neither the unions nor the companies can afford to capitulate.
After promises of vast wage hikes lured hard-up workers from rival unions, AMCU must prove to members it can deliver.
"We are going to get what we want," said 28-year-old rock drill operator Oliver Thipe at Amplats's Bathopele Mine.
"We have been struggling for a long time for the wages. This is the time for a better living wage. AMCU will bring it," he said.
But platinum firms, reeling from previous industrial action and facing growing competition abroad, must prove to boards and shareholders they still have a viable business model.
Amid the standoff, there was a partial reprieve for the gold sector late on Wednesday, with AMCU delaying strike action -- also slated for Thursday -- until a labour court rules on the legality of a work stoppage.
The strike is already causing ripples across the South African economy, with platinum prices rising, the rand weakening and the government seemingly ready to step in.
Labour Minister Mildred Oliphant is trying to organise talks with the union on Friday.
"Our economy is stressed enough already and another strike in the mining industry would have dire consequences," said the minister.
South Africa is the world's largest platinum producer and around 134,000 workers employed in the sector.
Platinum and related metals are used in products from catalytic converters to computer hard disks to dental fillings.
Amplats, Implats and Lonmin issued a rare joint statement on Tuesday, describing union wage demands as "unaffordable and unrealistic" and warning previous industrial action had already cost jobs.
The trio warned that previous strikes, rising operating costs and a sharp drop in platinum prices had resulted in the loss of around 11,000 jobs since December 2011.
They also claimed strike action directly cost them US$1.2 billion in lost revenue and workers lost US$110 million in lost wages over roughly the same period.
But unions are adamant that the country's mining firms, with billions of dollars in revenue, can afford to pay out more.
Anger at vast income disparities is raw in a country that even 20 years after the end of apartheid remains one of the most unequal on earth.