Implats faces violence in South Africa, threat of losing assets in Zimbabwe

Tensions remain high at the world’s largest platinum mine, as a second miner has been killed and strike action continues for a fifth week.

Impala Platinum, owner of the Rustenburg operations that account for 15% of global platinum supply, reported in a Feb. 20 press release that a laid-off winch operator was killed in a standoff with police, and that two laid-off workers and one employee were also injured in the evening incident.

Police spokesperson Thulani Ngubane is reported to have said at least seven people were injured during the standoff that started after hundreds of men tried to reach a Rustenburg mineshaft, and which escalated into a riot when confronted by police. The deadly altercation follows an incident last week where a mob beat a man to death after he apparently tried to return to work at the mine.

Implats reports that it is losing 20,000 oz. platinum production every week because there are not enough rock drillers to operate blasting at the mine. The company has already lost 80,000 oz. platinum since 5,000 rock drillers started an illegal strike on Jan. 20. By Jan. 30 the drillers were joined by the majority of the workforce at Rustenburg, and after giving them an ultimatum to return to work, Implats fired all 17,000 striking workers on Feb. 1. 

Since then the company has been working to rehire workers, with 8,368 rehired as of Feb. 22, including 1,074 rock drill operators. A further 15,800 workers did not join in the strike. But according to Implats, feuds between rival unions continue to fuel the work stoppage and violence, with the company maintaining that the strike is not about wages. A union meeting on Feb. 21, however, had many workers demanding higher wages.

Problems apparently started for Implats in January when retention bonuses given to some miners were not extended to 5,000 rock drill operators, who then launched the strike. The company reports the rock drillers rejected its National Union of Mineworkers in favour of the Association of Mineworkers and Construction Union. Since then, striking workers have skirmished with police on several occasions.

The company produced 490,000 oz. platinum from its Rustenburg operations in the last half of 2011, but production was severely affected after the mine was hit with safety work stoppages. The company reported it mitigated the 30,000-oz. loss of platinum production caused by the stoppages by treating stockpiled ore and making pipeline adjustments. In the same time period, six workers died at the Rustenburg mine. 

Implats, the world’s second largest platinum producer, continues to develop three new shafts at Rustenburg and reports that its capital projects remain largely unaffected by the strike.

Implats is not the only troubled platinum producer, with Anglo American, the world’s largest platinum producer, recently announcing a review of its Amplats division following numerous safety stoppages and rising costs. 

Since the Implats strike began, the price of platinum has gone from US$1,550 per oz. to US$1,680 per oz. 

Implats found it necessary to issue a second Feb. 20 press release regarding its Zimbabwe holdings. The company noted with concern that Saviour Kasukuwere, Zimbabwean minister of Youth Development, Indigenisation and Empowerment, had told media the day before that Implats should dispose of its 50% interest in the Mimosa mine to facilitate indigenization and leave Aquarius Platinum as the shareholder of reference for funding and technical support.

Implats produced 52,400 oz. platinum from Mimosa in the last half of 2011 at US$1,502 per oz., and produced 92,000 oz. platinum from its 87%-owned Zimplats mine, also in Zimbabwe, at US$1,322 per oz. Both mines saw higher costs after being hit with a 59% increase in electricity tariffs and a mandated 20% salary increase backdated to January 2011. The company reports it remains in discussions with the Zimbabwe government on indigenization issues.

Zimbabwe is working through the indigenization of numerous mines in the country, attempting to bring a 51% local ownership of foreign-owned mines.  

Caledonia Mining (CAL-T), one of the few Canadian-listed companies operating in Zimbabwe, announced it had reached a deal on indigenization. The company will sell 51% of the Blanket gold mine to a local empowerment fund, employee trust and indigenous Zimbabweans for a “paid transaction value” of US$30.1 million, to be repaid by future dividends from the mine, as well as donate 10% to a local community trust. 

Caledonia reported an unaudited, after-tax profit of US$19.2-million from Blanket for 2011.