(Bloomberg) -- The biggest union in South Africa’s platinum industry demanded wage increases of as much as 48% from producers in the world’s top supplier of the metal, setting the stage for a tough fight in upcoming pay talks.

  • The Association of Mineworkers and Construction Union wants minimum basic pay of 17,000 rand ($1,146) a month, President Joseph Mathunjwa said Friday. That compares with about 11,500 rand currently earned by the lowest-paid workers.

Key Insights

  • The opening salvo -- issued to companies including Anglo American Platinum Ltd., Sibanye Gold Ltd., and Impala Platinum Holdings Ltd. -- represents a substantial step up from the labor group’s years-long rallying cry for “a living wage” of at least 12,500 rand a month. That minimum still hasn’t been achieved at all producers.
  • The union wants companies to share more of their profits following rallies in the prices of palladium and rhodium, which are dug up alongside platinum. A weaker rand has also boosted miners’ earnings.
  • Metal and mining investors will be watching the negotiations closely for any potential strike. The militant labor organization held the longest platinum mining strike in the country in 2014.
  • While today’s demand looks high, it’s not necessarily a harbinger of the final outcome as South African unions often start off with big asks. In the last wage round, AMCU accepted an increase of 12.5% for the lowest-paid workers, after initially demanding a 47% increment.

Market Reaction

  • The FTSE/JSE Africa Platinum Mining Index pared some of its earlier gains. Precious metals prices are rallying Friday, with gold hitting a 14-month high and palladium reaching its highest since late March.

Read More

  • World’s Top Platinum Miners Brace for Hefty Wage Demands
  • Platinum Miners Brace for Labor Clash in New Ramaphosa Test
  • South Africa’s Firebrand Mine Unionist Is Headed for a Showdown

To contact the reporter on this story: Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net

To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net, Liezel Hill, Dylan Griffiths

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