Hot Features
Premium
Level up your trading with our powerful tools and real-time insights all in one place.
World’s number two platinum producer, Impala Platinum Holdings Limited (LSE:IPLA), has approved a wage increase – the second within six months – in response to the demand from workers more than two weeks ago, in a move to avert the potential threat of a second strike that weighed heavy on the company’s financials for the current fiscal year.
The South African-based miner swiftly moved to increase pay of their workers following a “full wage benchmarking exercise” after receiving a memo from an Interim Workers Committee (IWC), which asked for a 10% increase in pay on 11th September 2012.
Back then, the company’s Chief Executive, Terence Goodlance, expressed opposition to another salary increase at that amount as it would mean a double compensation, considering the same was granted only in April, following a six-week strike that damaged the miner’s balance sheet.
However, the wage increase announced today is only nearly half of the demand, at 4.8%, which Impala called “a market adjustment” to be implemented on 1st October 2012, the same day workers at Lonmin (LSE:LMI) are to receive their 11% – 22% increase, following their own six-week work stoppage that killed 45 people.
Industry-wide Issue
The South African mining industry has been under serious economic attack this year following a series of industrial actions all tied to salary grievances of workers particularly in the platinum and gold sectors.
Impala’s move today is seen as an attempt not to repeat the ordeal the company went through earlier this year that cut some 2.8 billion South African Rand (SAR) or about £212 million in lost revenue.
South African President, Jacob Zuma, said the work stoppages caused by the labour unrest has cost SAR 4.5 billion in lost production revenue in an industry that contributes to about a fifth of the country’s gross domestic product.
That figure is expected to rise as further industrial actions are seen in other mining companies, including the world’s largest platinum producer, Anglo American Platinum (LSE:AAL), and major gold producers as AngloGold Ashanti Limited (LSE:AGD) and Gold Fields (NYSE:GFI), whose workers are also demanding higher salaries.
Compensation in South Africa’s gold mining sector is governed by a centralised collective bargaining agreement across all mining companies and Mr. Goodlace’s statement hinted the platinum business is planning to do the same.
“The wage adjustment supports this imperative and our long-term strategy to establish a new multi-union industrial relations dispensation in our operations while moving towards a centralized wage engagement process for the platinum mining industry,” Mr. Goodlace, a former executive at Gold Fields, commented on the newly approved wage hike.
This is the third salary increase initiated by workers at their employers using the threat of strike as their weapons, with employers yielding at their demands in an effort to control damage and ensure that the business continues to operate.
Impala’s action is no exception. In the words of Mr. Goodlace:
“The overriding imperative for all stakeholders should be to ensure peace, stability and order and in so doing create an environment for safe production.”
Company Spotlight
Impala Platinum Holdings Limited produced about 1.8 million ounces of platinum in 2011 contributing to about 25% of the world’s demand for the precious metal used in jewellery and carbon emission reduction functions in automobiles.
