(Bloomberg) -- South African platinum producers are preparing for significant wage demands as workers eye windfall earnings from a rally in metal prices.
The Association of Mineworkers and Construction Union is meeting its members across the country’s so-called Platinum Belt this week, before presenting demands to seven producers, including Anglo American Platinum Ltd., Sibanye Gold Ltd., and Impala Platinum Holdings Ltd. The largest and most militant labor organization in the industry is aware that higher palladium and rhodium prices, plus a weaker rand, have boosted miners’ profits.
AMCU will make “substantial” demands in the coming weeks, said Dick Forslund, who has previously advised the union and made a presentation at an AMCU conference on June 4. Those demands will go beyond AMCU’s core target for the past eight years of raising basic monthly pay to 12,500 rand ($846), said Forslund, adding that the lowest-paid workers currently receive 10,800 rand.
“They know platinum companies are doing well,” said Forslund, an economist at Alternative Information and Development Centre. “It would be very hard for mining companies to plead poverty.”
In 2016, the union accepted a 12.5% wage increase after initially demanding 47%. Two years before that AMCU led the industry’s longest-ever strike, costing billions of dollars of revenue and wages.
Read More: Platinum Miners Brace for Labor Clash in New Ramaphosa Test
“We expect another tough round of negotiations,” Jana Marais, spokeswoman for Anglo Platinum said. “Our employees’ disposable income has been under increasing pressure in a difficult economy, while the platinum mining industry also continues to face significant challenges.”
While annual inflation slowed to 4.4% in April, fuel costs have surged and bread and cereals rose by 6.1% from a year earlier.
AMCU’s top negotiators Jimmy Gama and Jeffrey Mphahlele couldn’t be reached for comment. On Tuesday, the union held mass meetings at platinum mines.
Still, the wage demands of workers must be set alongside the claims of investors, who have received few dividends from South African platinum producers over the past decade, said Rene Hochreiter, an analyst at Noah Capital Markets Ltd.
“If companies give more than 4% or 5%, then I would be very upset if I was a shareholder,” Hochreiter said. “Why should workers be more equal than shareholders who have provided a lot of capital.”
--With assistance from Paul Burkhardt and Rene Vollgraaff.
To contact the reporter on this story: Felix Njini in Johannesburg at firstname.lastname@example.org
To contact the editors responsible for this story: Lynn Thomasson at email@example.com, Dylan Griffiths, Nicholas Larkin
©2019 Bloomberg L.P.