Amplats says back in profit, but South Africa strikes loom

by Reuters
Wednesday, 22 January 2014 09:20 GMT

* Strike to hit over half of global platinum output

* Amplats says back in profit in 2013

* Strike would set back Amplats' recovery

* Pretoria offers last-ditch mediation

By Ed Stoddard

JOHANNESBURG, Jan 22 (Reuters) - Anglo American Platinum (Amplats) swung back into profit in 2013 as it rebounded from a wave of wildcat strikes but its recovery is threatened by looming strikes across South Africa's platinum belt.

Maintaining profit margins will be tough if the hardline Association of Mineworkers and Construction Union (AMCU) goes ahead with its planned industrial action on Thursday at Amplats and rivals Impala Platinum and Lonmin.

Around 100,000 workers or a fifth of South Africa's mining labour force could down tools in a stoppage that would hit over half of global production of the metal used to make emissions-capping catalytic converters in automobiles.

Amplats, the world's top producer, said on Wednesday its 2013 headline earnings per share were expected to be between 480 and 590 cents, compared with a loss of 562 cents for 2012, the first time the Anglo American unit fell into the red.

Headline earnings per share are the main profit gauge in South Africa. Amplats said its return to profit stemmed from higher sales volumes and a favourable rand/dollar exchange rate.

AMCU's threatened strike could unravel its hard-fought return to profit, especially if it is protracted.

The chief executives of the three affected platinum producers said on Tuesday the industry could ill-afford further production and job losses, noting they had lost a combined 879,400 ounces of output to labour stoppages in 2012 and 2013.

Companies have also dismissed AMCU's demands to more than double the basic wage as "unaffordable and unrealistic".

The government has offered to mediate last-ditch talks to avert a strike.

"The ministers of labour and of mineral resources are fully engaged both on the labour side and on the mining companies side," South African Pravin Gordhan told local broadcaster Talk Radio 702 in an interview from Davos.

Implats spokesman Johan Theron said the company would be willing to take part in talks, although AMCU leader Joseph Mathunjwa was equivocal, saying its membership had to be consulted.

"We will look at those options," he told Talk Radio 702.

Fresh stoppages in the platinum and gold mines would hit key South African exports, putting more pressure a rand already near 5-year lows and dealing a fresh blow to investor confidence in Africa's biggest economy.

President Jacob Zuma and the ruling African National Congress (ANC) are also keen to avoid labour unrest ahead of general elections expected in around three months time.

AMCU emerged as the dominant union on the platinum belt after poaching tens of thousands of members from the National Union of Mineworkers (NUM) in a vicious turf war in which dozens of people were killed.

The union is also threatening to strike over wages on Thursday at several gold mines operated by AngloGold Ashanti , Harmony Gold and Sibanye Gold.

Bullion producers are seeking a court order to halt the strike on the grounds that a wage agreement signed with last year with NUM - still the majority union on the gold mines - applies to all workers in the sector.

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