Platinum mines not making money: Implats

[LazyLion]

Most platinum mines in South Africa are not making any money and cannot afford to pay workers R12,500, Impala Platinum (Implats) told SAfm in an interview on Friday.

"Business is struggling quite clearly. Most [platinum] mines in South Africa are not making any money," Implats spokesman Johan Theron told the broadcaster.

"If you look at Impala, our wage bill is R7 billion, so a 10-odd percent increase is an extra R700m which simply we don't have."

He said the company was trying to discuss with the unions involved in the platinum sector strike on how to help them improve profitability.

"The conversation we are trying to have with unions is how do we work together to improve profitability so that we can make some of these demands affordable and I think that's what we should be focusing on."

A strike by the Association of Mineworkers and Construction Union at Impala, Lonmin and Anglo American platinum entered its second day on Friday.

Workers are pushing for an entry-level monthly salary of R12,500.

The strike would continue during a meeting between the labour department, the mining companies and Amcu at the Commission for Conciliation, Mediation and Arbitration in Johannesburg.

Lonmin CEO Ben Magara told SAfm the company had been negotiating with the union since October.

"We have not found an answer, we have not found each other. The employees have chosen to strike because it's their right."

"They [the unions] are hoping to shake the tree and hoping something will come down."

Magara said the demands from Amcu was more than R12,500.

"It is a challenge for us, the industry cannot afford it. We have offered between eight and 8.5 percent," he said.

On rand value, the minimum salaries were around R5800 and R6000, which would an eight percent increase, he said.

"This is about three percent higher than the current inflation in the country," said Magara.

"We are challenged... We are hoping we find a solution."

Asked about their strong share price, Magara said the longterm fundamentals of platinum remained attractive and robust.

"The reality is today we are not there yet, we are not delivering where we need it to be...We have to look at all the challenges and create profitable businesses."

He said no one was benefiting from the strike,

"Every week that we lose, is two percent of their salary (our employees)...We are encouraged by the meeting we are going into now," Magara said.

Theron said Amcu's demands were detailed on five pages. The R12,500 was just one demand, he said.


Source : Sapa /mar/fg/jje
Date : 24 Jan 2014 08:52

 

[MKFrost]

Very badly written in my opinion with many sentences that just do not make sense and or are irrelevant. Quality of reporting is really taking a nose dive and News24 is a very good example. Know this is not from there but seems like this poor reporting is the new norm.

 

[Inn3rs3lf]

"Brown, who stepped down as CEO at the end of June last year, remained a director of Impala for a further three months during which he was paid 16.8 million rand ($1.7 million) in salary, benefits and bonuses, the Johannesburg-based company said in its annual report posted on its website. Brown was paid 13.1 million rand during his last full year as CEO."

Nuff said.

 

[F1 Fan]

"Brown, who stepped down as CEO at the end of June last year, remained a director of Impala for a further three months during which he was paid 16.8 million rand ($1.7 million) in salary, benefits and bonuses, the Johannesburg-based company said in its annual report posted on its website. Brown was paid 13.1 million rand during his last full year as CEO."

Nuff said.

Not really a valid argument. A large company like that needs to pay it's CEO's big money. Otherwise, they would not have a CEO. Simple

 

[LazyLion]

"Brown, who stepped down as CEO at the end of June last year, remained a director of Impala for a further three months during which he was paid 16.8 million rand ($1.7 million) in salary, benefits and bonuses, the Johannesburg-based company said in its annual report posted on its website. Brown was paid 13.1 million rand during his last full year as CEO."

Nuff said.

I agree, their bonuses are obscene, but if that was shared out between all the workers and employees everyone would get R1,000 extra once off.
Less than their actual annual bonus.
That's not really much to write home about.

 

[Paul_S]

"Brown, who stepped down as CEO at the end of June last year, remained a director of Impala for a further three months during which he was paid 16.8 million rand ($1.7 million) in salary, benefits and bonuses, the Johannesburg-based company said in its annual report posted on its website. Brown was paid 13.1 million rand during his last full year as CEO."

Nuff said.

Take that R13.1 million and divide it by 46671 employees.
That's an extra R23.39 per employee per month.
What the employees are demanding is not viable even if you fired all the managers and divided their salaries amongst the workers.

Nuff said.

 

[The_Assimilator]

I think the point being made is that if you're earning R 5,000 a month, R 16 million for 3 months is almost unimaginable wealth. Will giving that bonus money to the workers help? No. Will taking a smaller bonus and ploughing the rest back into the company show you care about your workers, and thus win you goodwill? Yes.

 

[LazyLion]

I think the point being made is that if you're earning R 5,000 a month, R 16 million for 3 months is almost unimaginable wealth. Will giving that bonus money to the workers help? No. Will taking a smaller bonus and ploughing the rest back into the company show you care about your workers, and thus win you goodwill? Yes.

I doubt it... they will just find something else to complain about.

Remember, these leaders of the Mine Unions have to justify their existence and their 'mission' somehow, even if they have to just make stuff up.

 

[SirFooK'nG]

I think the point being made is that if you're earning R 5,000 a month, R 16 million for 3 months is almost unimaginable wealth. Will giving that bonus money to the workers help? No. Will taking a smaller bonus and ploughing the rest back into the company show you care about your workers, and thus win you goodwill? Yes.

Good luck trying to get anyone to take the responsibilities of the CEO. What you must remember is that your top brass get charged with culpable homicide for any death on their watch. Awesome pay does not just come free....

 

[rza]

Not really a valid argument. A large company like that needs to pay it's CEO's big money. Otherwise, they would not have a CEO. Simple

Unfortunately that is the kind of salaries that gives workers the ammunition to strike. If a retired CEO earned 30% more than he did the previous year, then why can't the workers feel that they also deserve such an increase?

The problem these mining companies face is that workers are more smarter now, and they know that similar workers in overseas operations like Australia are earning way more than they are earning.

 

[zippy]

I think the point being made is that if you're earning R 5,000 a month, R 16 million for 3 months is almost unimaginable wealth. Will giving that bonus money to the workers help? No. Will taking a smaller bonus and ploughing the rest back into the company show you care about your workers, and thus win you goodwill? Yes.

That still doesn't solve the main problem. The mines are making a loss. South African mining industry is dying out. Sort of like the coal mining industry in the UK in the 1970's. Just a bit slower with the violence spread out over a longer period.


There will be no goodwill for a very long time.

 

[techead]

wow... looks like this is having an astronomical effect on the exchange rate

R11.17 to the dollar

when this country goes up in flames (if the fuel price isnt totally out of site) I'll yell a very loud "told you so"

Africa for the win

 

[LazyLion]

workers are more smarter now

lol wut? Proof?

 

[ToxicBunny]

Unfortunately that is the kind of salaries that gives workers the ammunition to strike. If a retired CEO earned 30% more than he did the previous year, then why can't the workers feel that they also deserve such an increase?

The problem these mining companies face is that workers are more smarter now, and they know that similar workers in overseas operations like Australia are earning way more than they are earning.

More smarter?

Sorry, but ignoring the blatant abuse of the English language there, the workers are not smarter. If they were they'd have a better understanding that striking doesn't actually benefit them at all, even in the long run.

 

[zippy]

Why South African mining is in decline:

An Article from Feb 2011 :

http://uk.reuters.com/article/2011/02/04/uk-south-africa-mining-idUKLNE71303020110204

....
Even though South Africa is still believed to have 47,000 tonnes of gold reserves, or a global share of 12.8 percent, according to the U.S. Geological Survey, the one-time champion has slipped to third in production behind China and Australia.

That should not be a problem for a country which still has the good fortune to sit atop the world's most valuable mineral deposits. According to a study last year by U.S. investment bank Citi, South Africa's extant non-energy mineral wealth is $2.5 trillion -- comfortably more than Russia and Australia, with around $1.6 trillion apiece.

Of these reserves, by far the most valuable is platinum, the precious metal used in gadgets such as catalytic converters and hard-disc drives, as well as jewellery. The Citi report valued the platinum deposits at nearly $2.3 trillion, reflecting the pre-eminence of a metal that now fetches $1,800 an ounce, nearly 30 percent more than gold.

Yet South Africa's platinum sector has grown by just 4 percent a year since 1990. That's not enough to fill the void left by declining gold production. Overall in the commodities boom that prevailed from 2000-2008, South Africa's mining industry contracted by 1 percent every year in dollar terms, according to consultancy Global Insight. Meanwhile, mining in China grew at 19 percent a year, Russia 10 percent and Indonesia 8 percent.

With mining accounting for 8 percent of South African gross domestic product and 500,000 jobs last year, the statistics make grim reading for a government saddled with 25 percent unemployment.

POWERING DOWN

Infrastructure and power supply are both big problems. The rail network cannot get enough ore to the ocean, and the power grid struggles to meet demand. After decades of offering cheap electricity to attract investment, state utility Eskom has run out of cash to build new power stations, and prices are having to rise fast to plug the funding gap.

The government has granted Eskom three years of 25 percent power hikes and may give it another two after that, hammering margins at gold mines operating as deep as 4,000 meters underground, an engineering feat that imposes huge ventilation costs. "If they do have further large increases, it will certainly affect us badly, especially on those operations which are very deep," says Graham Briggs, chief executive at Harmony Gold, the world's fifth-largest producer.

Even though new power stations are being built, Eskom says supply is likely to remain tight until 2017, and many executives remember a 2008 supply crisis that brought the grid to its knees, forcing mines to stop work and costing the economy billions of dollars in lost output. The prospect of rising power costs is, miners say, a disincentive to invest in "beneficiation" -- the downstream processing that should allow South Africa to export manufactured products rather than just huge quantities of raw ore, and create thousands of jobs.

"For us to be successful in beneficiation, we are going to need competitive energy rates," said Mark Cutifani, chief executive of AngloGold, the world's third-largest producer. "The country has to think carefully about its energy strategy. It's inconceivable and inconsistent for us to develop and deliver 5 million new jobs if we are continuously increasing the power prices the way they are at this point in time."

Also weighing is a chronic lack of skills in the workforce -- more than half South Africa's 500,000 miners are illiterate -- making training, most notably on safety matters, very difficult. Post-apartheid laws and investment have dramatically improved a dire safety record, although 123 miners were killed last year, and the drive for "zero harm" and a safety record equal to the United States or Australia is far off both in terms of time and money.

"The mining industry is the most unskilled, uneducated group of workers of any sector in the South African economy," said Philip Frankel, author of "Falling Ground", a book on mine safety. "We are dealing with a lot of people who can't understand the rules and have no particular compunction to work with the mining safety rules," he told Reuters.

TAKING THE LOW ROAD

Compounding these practical problems is the sense of political uncertainty surrounding the ruling African National Congress ANC.L. Nelson Mandela's liberation movement-turned-government managed to calm investors with broadly market-friendly policies throughout the 1990s, but mining's malaise is rekindling doubts about its left-of-centre soul.

Combined with a growing whiff of corruption and the geographic proximity of Zimbabwe, it is little wonder some observers are asking whether the continent's biggest economy is headed down the path to Robert Mugabe-style cronyism and economic anarchy.

Officially, the ANC is in no doubt about the importance of the mines. Last year it placed the sector at the heart of a plan to create millions of jobs and shift the economy up a gear from medium-paced emerging market to rip-roaring Asian-style tiger.

Yet the noises from Pretoria all emphasise a greater, not lesser, role for the state, and present little by way of concrete solutions to the power and other infrastructure problems. The strength of the rand, which has gained more than 25 percent against the dollar since the start of 2009, is another headache the industry could do without.

Of two growth scenarios painted by the Chamber of Mines in 2009 --- a "high road" leading to 213,000 direct new jobs and export earnings doubling by 2020, and a "low road" of just 92,000 jobs with only a fractional increase in export receipts -- few economists are betting on the high.

"Unfortunately, it's likely to be fairly anaemic," said Stanlib's Lings.

"APARTHEID LIVES ON"

The concerns start at ground level, in communities like Moloto's.

The theory was that with the end of apartheid, mining would "transform", absorbing black capital and managers to become an engine of growth for all South Africa's 48 million people. In reality, though, little "transformation" has happened: black ownership targets have been missed or side-stepped with marriages of convenience to political bigwigs; black managers remain the exception in an industry still run largely by the 10 percent white minority; and communities feel as alienated as they did in the past.

"We may have a black president but apartheid lives on in another form," says 53-year-old Jerry Tshehlakgolo, a resident of Magobading, a dispiriting village of 97 homes relocated six years ago to make way for a new shaft at the Twickenham mine. "The mining companies just bribe local officials in the name of job creation. People are still being moved, apartheid-style, to make way for mining operations."

Such views have piled political pressure on the ANC to remake mining, and last year it hardened up a target of 26 percent black ownership and 40 percent black management by 2014.

The push for black economic empowerment (BEE.L), as the policy is known, has spawned some black-run firms, but in many instances it has simply been a case of a black face on white capital. At a news conference late last year, mines minister Susan Shabangu delivered a damning indictment of BEE, saying some black bosses had no interest in running a mine and were nothing more than a front. "Some of the black economic empowerment partners who attend site visits are clueless about operations and are over-reliant on consultants -- a clear case of fronting," she said.

The risk, argues Peter Leon, a mining expert at Johannesburg law firm Webber Wentzel, is that by beefing up its goals for black ownership and management, the ANC will only invite more rule-bending and chicanery. Furthermore, it will do little to ease the concern and confusion of mining firms that have been hesitant to commit to multi-billion dollar investments that measure returns in decades, not mere months or years.

"Given South Africa's endemic skills shortage, how are you going to have 40 percent black management at every level of a company, starting with the executive committee of the board? It seems like an impossibility," Leon said. "On the equity side, the big mining companies will be able to achieve it but with the non-equity targets, the industry seems to have been set up for failure."




....

1. fail at investment in infrastructure, transport, electricity
2. fail at investment in education, especially adult education

Now the only solutions are painful expensive ones which nobody is willing to pay for, so the decline will continue,

 

[The_Assimilator]

... similar workers in overseas operations like Australia are earning way more than they are earning.

Australia is a first-world country, South Africa is a third-world country. You cannot reasonably expect wage parity between the two nations.

 

[zippy]

Australia is a first-world country, South Africa is a third-world country. You cannot reasonably expect wage parity between the two nations.

Lack of ambition. Drive. Weak. Why South Africa is a third-world country. And why the mining industry is going down the toilet. Pathetic attitude.

 

[rza]

More smarter?

Sorry, but ignoring the blatant abuse of the English language there, the workers are not smarter. If they were they'd have a better understanding that striking doesn't actually benefit them at all, even in the long run.

They got 25% salary increase last year, so that's smart considering an average South African got 5%. They may have gone about it in a violent way but they got managers to take them seriously. They'll probably get another double digit increase this year as well. If they get 10% then it's a great victory.

 

[ToxicBunny]

They got 25% salary increase last year, so that's smart considering an average South African got 5%. They may have gone about it in a violent way but they got managers to take them seriously. They'll probably get another double digit increase this year as well. If they get 10% then it's a great victory.

Are you just ignoring the 2 months they didn't work and didn't get paid for, and now have had to take out loans for at 25%+ interest rates just to survive.

At best they're in exactly the same financial position they were in prior to the strikes and raise, more than likely they're worse off.

 

[rza]

Australia is a first-world country, South Africa is a third-world country. You cannot reasonably expect wage parity between the two nations.

Salaries are global now, there's no such a thing as getting more in Dubai than you would in South Africa, if you are a skilled resource. But for mining the situation is even more similar because:
1. both SA and Aussie miners work for same companies in some cases
2. the price of the metal is the same, whether it's mined in a first or third-world country
3. Unions are more organised, and they know what their counterparts in other countries earn