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South Africa's New Mining Minister Attempts to End Platinum Strike

(wsj.com)
Updated: 2014-05-29 10:41
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    South Africa's new mining minister vowed on Wednesday to try to end an 18-week-long strike that has brought platinum output to a near halt and weakened the country's economy.
   
    Minister of Mines Ngoako Ramatlhodi also signaled he will focus on speeding up a transformation of the mining industry, which has been hit by debilitating strikes over the past three years, thousands of job losses and mine closures.
   
    The current platinum strike is the longest ever in South Africa, and has cost platinum producers nearly $2 billion in lost revenue and contributed to the country's economy contracting in the first quarter for the first time since 2009. Data released on Tuesday showed a 0.6% annualized drop in gross domestic product in the first three months of this year, with mining output having fallen the most since 1967.
    
    The world's three-biggest platinum producers- Anglo American Platinum Ltd., Impala Platinum Holdings Ltd.  and Lonmin PLC-have been engaged in talks with the Association of Mineworkers and Construction Union since last week. Those talks, Mr. Ramatlhodi said in an interview with local radio stations on Wednesday, haven't led to a resolution yet. The minister said he is now intervening and met with AMCU's leader on Tuesday and with the company chief executives on Wednesday.
   
    He said his department would launch a task force to try to bring about a negotiated end to the strike, and that all parties would meet on Thursday with the mining ministry and finance department. The former mining minister and the deputy president of the country tried similar interventions with limited success, but the companies hope a fresh face will have more luck.
   
    Around 70,000 platinum mine workers have been on strike since the end of January to demand a near tripling of entry-level wages to 12,500 rand ($1,196) a month. The companies say they can't afford to meet the demand, while the union argues that if chief executives can earn many millions of rand a year then they should be able to increase the pay of the workers, many of whom live in shacks without electricity or running water.
   
    As the strike continues, violence and intimidation around the mines has increased. In the past month, six people have been killed in the platinum-mining belt, and all but one worked at the mines. On Wednesday, the rival National Union of Mineworkers said some of its members' houses were target by gasoline bombs.
   
    "There has been some movement toward meeting one another but we have not arrived there," Mr. Ramatlhodi said of the strike talks. "I don't have a magic wand. It will require a lot of hard work."
   
    Mr. Ramatlhodi, a lawyer and former deputy minister of correctional services, was sworn in as the new mining minister this week after the African National Congress maintained its dominance in national elections in early May. He has his work cut out for him. Trust between AMCU, a new upstart labor body that has become the biggest union at platinum mines since 2012, and the mining companies is low, he said.
   
    Tuesday's economic data underline the need to resolve the strike. South Africa's Reserve Bank lowered its growth outlook for the country this month to 2.1%, far below the rate needed to create substantial jobs in a country where about a quarter of the workforce is unemployed. The platinum companies say the length of the strike will make it hard to avoid cutting more jobs when production does restart.
 

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