South Africa’s Impala Platinum Holdings Ltd. on Thursday declared force majeure on supply contracts at its strike-hit Rustenburg mine, as five weeks of labour unrest took their toll on the battered mining industry.
The world’s top three platinum producers, including Impala, and South Africa’s striking AMCU union are due to resume wage talks on Friday, in hopes to end the strike that has taken out more than 40 per cent of global output of the precious metal.
Implats’ decision to declare force majeure underscores the wider effect the strikes are likely to have on South Africa’s economy, especially on the smaller and mid-size companies that supply mines with tools and equipment.
“We have no choice, the mine is shut,” spokesman Johan Theron said, referring to the decision to declare force majeure, which literally means “higher power” and allows certain terms of an otherwise legally binding agreement to be ignored.
The strike in Rustenburg, northwest of Johannesburg, is costing the world’s second-largest platinum producer 2,800 ounces a day in lost output and 60 million rand ($5.5-million) a day in revenue.
CEO Terence Goodlace told reporters on Thursday that he had recently spoken directly with Joseph Mathunjwa, the president of the Association of Mineworkers and Construction Union (AMCU), members of which have also downed tools at top producer Anglo American Platinum and Lonmin.
That the two sides are talking at the top level signals a renewed drive to end the stoppage, though the companies and AMCU remain poles apart on the issue of wages. Goodlace reiterated that demands for a more than doubling of basic wages to 12,500 rand a month are “absolutely unobtainable”.
The producers have offered increases of up to 9 per cent.
Implats reported headline earnings per share up 10.8 per cent to 860 million rand or 142 cents per share, in the six months to Dec. 31.
It said that lower metal prices over the period “were more than offset by the weaker average rand-dollar exchange rate, which benefits South African mining companies that price their commodity in dollars.
The company’s Zimbabwe unit, Zimplats, has been a bright spot, with platinum sales for the period rising more than 63 per cent to 115,800 ounces.
Implats, however, cannot avoid the shadow cast by the wage dispute at its key Rustenburg operations.
“Given the current industrial relations climate and as part of the group’s cash preservation measures, the board has decided not to declare an interim dividend,” Implats said.
Goodlace said the stoppage is a blow to the company’s recovery efforts. “It does stunt what we achieved,” he acknowledged, adding that it will take time to reboot operations once a resolution is found.
During a subsequent presentation he said it could take “one or two months” to restore production to pre-strike levels because workers would have to be retrained and many steps, including safety procedures, would need to be taken.
The strike has been marred by violence, though not on the scale of 2012, when dozens of people were killed.
The poisonous atmosphere was underscored by a police statement on Wednesday that said two AMCU members have been charged with attempted murder in relation to an attack on a non-striking employee at Amplats’ Khuseleka shaft when he arrived for work on Feb. 3.
The union members are alleged to have stripped the Amplats employee before taking him to a dumping site where he was assaulted with stones, the police statement said.