Amplats Miners Fired - Union Leader Executed

[House]

http://af.reuters.com/article/southAfricaNews/idAFL6E8L51PJ20121005

JOHANNESBURG, Oct 5 (Reuters) - South Africa's Amplats fired 12,000 wildcat strikers on Friday, a high-stakes attempt by the world's biggest platinum producer to push back at a wave of illegal stoppages sweeping through the country's mining sector and beyond.

Later on, a trade union leader was shot dead near a mine run by platinum producer Lonmin in a potentially explosive escalation of the two-month-old violent labour unrest that took the death toll to 49.

National Union of Mineworkers (NUM) spokesman Lesiba Seshoka said the NUM branch leader had been killed "execution style" in the evening but gave no further details.

A six-week stoppage at Lonmin in August and September erupted out of a turf war between the NUM and the more militant Mineworkers and Construction Union (AMCU), which accuses the NUM of acting for its government allies rather than its members.

The hefty hikes won by workers from that saga has been a red rag to others while anger has been stoked by the killing of 34 miners in a hail of police bullets outside Lonmin's Marikana mine in an incident that evoked apartheid-era shootings.

The sackings at Amplats (Anglo American Platinum) on Friday triggered a sharp fall in South Africa's rand as investors dumped the country's assets.

The rand fell as much as 4 percent to 3-1/2 year lows after Johannesburg markets closed, adding to the mounting toll inflicted on Africa's biggest economy.

Strikes have spread beyond the mining sector, with Shell saying on Friday it would not be able to honour contracts to deliver fuel near Johannesburg because of a trucking strike.

The unrest is causing political trouble for President Jacob Zuma and his ruling African National Congress (ANC), the veteran liberation movement with long-standing ties to labour unions.

"You fire 12,000 people, and it's like 'Oh my god, what happens now?'" one Johannesburg-based currency strategist said.

When rival Impala Platinum fired 17,000 workers on an illegal strike rooted in the NUM/AMCU struggle, it led to a violent six week stoppage in which the company lost 80,000 ounces in output and platinum prices jumped 21 percent.

The wage deal that followed the killings at the Marikana mine in August triggered copycat demands in gold and iron ore.

"Amplats had been giving signals that it was going to hold the line after Lonmin had folded - but it's a huge gamble," said Nic Borain, an independent political analyst.

"Someone had to take it on the chin or this would have kept on unravelling and spread through the economy. It's difficult to know whether this causes the unrest to spread or whether it takes some of the sting out of it. It could go either way."

Speaking to South Africa's e-News television channel, one dismissed worker said Amplats was "starting a war".

ZUMA UNDER PRESSURE

The ANC Youth League, a fierce critic of Zuma, lashed out at Amplats, which it said "has made astronomical profits on the blood, sweat and tears of the very same workers that today the company can just fire with impunity".

"Amplats is a disgrace and a disappointment to the country at large, a representation of white monopoly capital out of touch and uncaring of the plight of the poor," it said.

Zuma tried to put a positive spin on the situation in a speech to business leaders late on Thursday, stressing that since the end of white-minority rule South Africans have shown "the capacity to overcome difficulties when we work together".

"We should not seek to portray ourselves as a nation that is perpetually fighting," he said.

However, with an ANC leadership run-off looming in December, Nelson Mandela's 100-year-old liberation movement is preoccupied with its own divisions. Zuma is seen as unlikely to take any action that could upset his political allies in the unions.

"In the build-up to the election, the government is unlikely to come out with any clear policy directives," said Simon Freemantle, an analyst at Standard Bank in Johannesburg.

Reflecting such concerns, Moody's cut South Africa's credit rating last week. Finance Minister Pravin Gordhan has already said he will have to cut his 2.7 percent growth forecast for 2012 when he delivers an interim budget on Oct. 24.

MINER SHOT

More than 75,000 miners, or 15 percent of the workforce in a sector that accounts for 6 percent of output, have been out on unofficial strikes, and tensions with security forces and mining bosses were running high even before the mass Amplats sackings.

Near the "platinum belt" city of Rustenburg, 120 km (70 miles) northwest of Johannesburg, workers said a miner was killed by a rubber bullet fired by police on Thursday night.

Police would not confirm the cause of the death, although the ground nearby was strewn with spent rubber-bullet shell casings and teargas canisters after clashes the previous night.

On Friday, protesters in a shanty town near the Amplats mine barricaded streets with rocks and burning tyres as more than 30 riot police backed by armoured vehicles stood nearby.

AngloGold Ashanti, South Africa's biggest bullion producer, has lost virtually all local production due to wildcat strikes, while rivals Gold Fields and Harmony Gold have also taken a hit. Around 300 strikers at Kumba Iron Ore have also blockaded the company's giant Sishen mine in the remote Northern Cape province.

Apart from the mining sector, a strike with more potential to damage the wider economy is brewing in transport, with 20,000 truckers on a two-week authorised stoppage to demand higher pay.

Shell said on Friday it could not honour fuel delivery contracts around Johannesburg, declaring "force majeure" to free itself and customers from existing obligations.

"There is fuel available across the country, so the issue is not fuel supply, but the challenge is delivering it safely to our retail sites," the oil major said. Other petrol companies are holding their breath, especially around the commercial hub Johannesburg, but have not yet followed Shell's move.

Raising the stakes, transport union SATAWU said it wanted workers at railways and ports to strike next week, a development that would affect coal and other mineral shipments.

 

[HeftyCrab]

Do they want to cripple the country?

 

[Geriatrix]

Do they want to cripple the country?

They're not thinking about the country.

 

[Mars]

it led to a violent six week stoppage in which the company lost 80,000 ounces in output and platinum prices jumped 21 percent.

They didnt actually lose those ounces did they? They're still in the ground. (/dons tinfoil hat) and the price of platinum went up... hmmm...
So how exactly did the mines lose?

 

[OMB]

They didnt actually lose those ounces did they? They're still in the ground. (/dons tinfoil hat) and the price of platinum went up... hmmm...
So how exactly did the mines lose?

the mines still have to cover operational costs even during a strike and if you're not producing you're not earning, you can't just switch everything off during the strike and then switch it back on again afterwards. Also as soon as Lonmin settled with the strikers, the price of platinum came down again...

 

[murraybiscuit]

They didnt actually lose those ounces did they? They're still in the ground. (/dons tinfoil hat) and the price of platinum went up... hmmm...
So how exactly did the mines lose?

Input costs - you can't just hibernate a processing plant and mining mech or run it at half capacity very easily. You also have to salary non-union staff, who are generally on higher cost bands. There could also be penalties from clients for undersupply. And you could lose contracts to competition locally or globally through drop in investor confidence (harder to quantify). How much price increase would offset losses would possibly need some detailed figures?

 

[House]

the mines still have to cover operational costs even during a strike and if you're not producing you're not earning, you can't just switch everything off during the strike and then switch it back on again afterwards. Also as soon as Lonmin settled with the strikers, the price of platinum came down again...

True.

Mines have to deliver a a certain amount of whatever they are mining per day, week or month or per order. Besides this, as Ol' Mean Bastid said, they need to cover operational costs and any delays or non-mining directly impacts the profitability of the company.

As example: If the company produces a ton of diamonds per day, this could be a daily income of a billion rand. The strike prevents this and the money is no longer generated as the diamonds that would have been mined are not and can not be delivered to clients or wherever it should go.

It stays a direct loss of income to the company, even if the diamonds are still underground.

 

[w1z4rd]

I hope the government are able to tame AMCU, its one of the the bloodiest unions in our history.

 

[Humberto]

It will be good if government and our president become more involved in this serious matter before it spirals out of control.

 

[w1z4rd]

It will be good if government and our president become more involved in this serious matter before it spirals out of control.

Nero fiddles while Rome burns.

 

[Nicci]

"Amplats is a disgrace and a disappointment to the country at large, a representation of white monopoly capital out of touch and uncaring of the plight of the poor," it said.

Ai. Always with the racist remarks

 

[karnuffel]

What frustrates me is that Anglo is not the guilty party here, they basically acted against employees that was breaking the law and threatening the lives of others. A true leader of the country would have acted long ago and could have avoided this mess.

 

[Hamster]

Every time something happens somewhere in RSA, ANCYL has something to say.

 

[Mars]

I understand.. but somehow I cant see six weeks of running on skeleton costing as much as they would have made..

$1600/oz x 80 000oz over a 6 week period = $128 000 000 into Rand (at R7/$) = R896 000 000

Thats eight hundred and ninety six million rand. Over a six week period.

Are my calculations correct?

The current platinum price is hovering about $100/oz more than that not to mention the weaker rand so at current rates:

$1700/oz x 80 000oz = $136 000 000 - R8.78/$ = R1 194 080 000

 

[Nicci]

Wow. That is a lot of money!!!

 

[shaunvw]

I understand.. but somehow I cant see six weeks of running on skeleton costing as much as they would have made..

$1600/oz x 80 000oz over a 6 week period = $128 000 000 into Rand (at R7/$) = R896 000 000

Thats eight hundred and ninety six million rand. Over a six week period.

Are my calculations correct?

The current platinum price is hovering about $100/oz more than that not to mention the weaker rand so at current rates:

$1700/oz x 80 000oz = $136 000 000 - R8.78/$ = R1 194 080 000

Must also remember a lot of businesses have to pay penalties if they miss a order or are late. So who knows how much they had to pay to their clients for not been able to deliver.

Edit: Just because that's the market price of platinum doesn't mean that's the amount they get for it, they probably sell to a middle man at a reduced cost.

 

[karnuffel]

I understand.. but somehow I cant see six weeks of running on skeleton costing as much as they would have made..

$1600/oz x 80 000oz over a 6 week period = $128 000 000 into Rand (at R7/$) = R896 000 000

Thats eight hundred and ninety six million rand. Over a six week period.

Are my calculations correct?

The current platinum price is hovering about $100/oz more than that not to mention the weaker rand so at current rates:

$1700/oz x 80 000oz = $136 000 000 - R8.78/$ = R1 194 080 000

I cant comment on your figures but a few things you need to remember:

• Shafts that are not actively being mined deteriorates at an alarming rate, safety risk and huge costs involved
• In the processing plants you have a lot of chemicals (acids etc) not being used (I am not an expert but I can imagine that this is not a very good situation)
• Starting and stopping the processing plants have huge electricity and machine wear implications, can you imagine what it is costing Anglo to stop and start the smelter for example?
• The mine is currently depleting its stockpile and will thus not have anything to sell in the near future, they are contractually obliged however to supply a certain amount of platinum.
• Platinum mines are not as profitable as we would like to believe

Link

Net profitability on half of South Africa's platinum mines is now almost zero

 

[Necuno]

Do they want to cripple the country?

All political play and power struggles, **** the rest as long as gravy is dealt and haz you can go to hell

 

[Nicci]

Why don't they make Trevor Manuel president. At least he knew how to work with money.

 

[Mars]

I cant comment on your figures but a few things you need to remember:

• Shafts that are not actively being mined deteriorates at an alarming rate, safety risk and huge costs involved
• In the processing plants you have a lot of chemicals (acids etc) not being used (I am not an expert but I can imagine that this is not a very good situation)
• Starting and stopping the processing plants have huge electricity and machine wear implications, can you imagine what it is costing Anglo to stop and start the smelter for example?
• The mine is currently depleting its stockpile and will thus not have anything to sell in the near future, they are contractually obliged however to supply a certain amount of platinum.
• Platinum mines are not as profitable as we would like to believe

Link

I'm trying to wrap my mind around it all..

There is also the whole share price issue, I'm sure that also has an effect on the whole thing.

But: If the platinum mines are not profitable why bother? If my business was not profitable then I would close it. End of story.

Who says they're not profitable? does that come from their annual report?

Being exposed to some mines thru family members implementing and programming PLC's, I understand the implications of shutting down a plant. Those costs can run into millions, but certainly not hundreds of millions. And Amplat sells their own platinum.
Who would they be contractually bound to supply to? And why would someone as large as Amplat bother with a middleman?