Workers down tools at South Africa's Amplats

JOHANNESBURG Wed Jan 16, 2013 4:38pm IST

A man walks past a train carrying goods, at Anglo Platinum's Khomanani shaft 1 mine in Rustenburg, northwest of Johannesburg January 15, 2013. REUTERS/Siphiwe Sibeko

A man walks past a train carrying goods, at Anglo Platinum's Khomanani shaft 1 mine in Rustenburg, northwest of Johannesburg January 15, 2013.

Credit: Reuters/Siphiwe Sibeko

Stocks

   

JOHANNESBURG (Reuters) - Workers at three of Anglo American Platinum's (AMSJ.J) South African mines went on an illegal strike on Wednesday, the day after the world's top producer of the precious metal announced plans to mothball shafts and cut 14,000 jobs.

A spokeswoman for Amplats, a unit of London-listed Anglo American (AAL.L), said an unspecified number of employees at its Khomanani, Thembelani and Tumela mines, in the heart of South Africa's platinum belt, had refused to go underground.

Only Khomanani is among the mines slated for indefinite closure or sale by the company, so the wildcat action suggests militant labor activists are making good their threat to bring sympathy strikes to other shafts.

The protests, which were expected after Anglo American unveiled its restructuring plans, combined with strong government objections to job cuts show how difficult it will be for the mining giant to push through changes critical for its recovery and that of its loss-making unit.

"The restructuring itself was fairly ambitious, it was probably not as much as some people wanted and more than others expected," analyst Jeff Largey at Macquarie in London said.

"Now it comes down to execution risk and the way things are looking right now, it is going to be more challenging than Anglo thought."

An Amplats labor leader based in the platinum belt city of Rustenburg earlier told Reuters that workers at several mines had refused to go underground overnight to protest against the company's restructuring plans.

The mining communities and shantytowns around Rustenburg, 120 kms (70 miles) northwest of Johannesburg, have been a flashpoint of labor and social unrest. Local media reported workers would be meeting later to plot wider strike action.

Amplats' share price slid over 6 percent while Anglo American's fell over 4 percent in early trade on Wednesday, dragging Britain's top share index .FTSE down.

South Africa sits on about 80 percent of the known reserves of platinum, used to build emissions-capping catalytic converters in automobiles, but weak demand has depressed the price. It rallied to three-month highs on Tuesday because of supply concerns triggered by the Amplats proposals.

GOVERNMENT ANGER

The planned retrenchments and closures, which Amplats says are needed to restore profits, risk provoking a repeat of the violent wildcat strikes in the gold and platinum sectors that resulted in more than 50 deaths last year.

They have also stirred anger from the government and ruling African National Congress (ANC) as they grapple with a jobless rate of over 25 percent and growing social discontent ahead of next year's general elections.

Mines minister Susan Shabangu lashed out at Amplats again on Wednesday, calling the company and its chief executive Chris Griffith "arrogant."

"Amplats decided to undermine all of us. Amplats continues to be arrogant ... They've been playing games with us," she said during an interview with SAFM radio.

"Listen to this, the arrogance of Chris. He said in his statement he's going to talk to labor. And he's not going to talk to government? He's not going to talk to us as the regulator," she said.

Anglo, which says its plan is critical to creating a sustainable platinum business, said in a statement that it took its regulatory and social responsibilities seriously.

"We will be continuing to consult with all our stakeholders on our proposals," the company said.

Adding to Anglo's woes, Kumba Iron Ore (KIOJ.J), also part of the Anglo stable, said on Wednesday that its full-year profit is likely to have fallen by about a third, hit by lower export prices and an illegal strike at its main mine.

Fueled by glaring income disparities within the industry and the wider economy, the labor unrest is also rooted in a bloody turf war between the militant newcomer Association of Mineworkers and Construction Union (AMCU) and the dominant National Union of Mineworkers (NUM).

A fresh wave of strike action on South Africa's restive platinum belt and elsewhere could be crippling to an industry battling with soaring wage and power costs and aging mines that are the deepest in the world.

"Everyone expected that when (Amplats) came through there would be some disruption, some protest. It is, though, somewhat surprising to see how far the government in particular has swung in terms of standing with the masses, playing up the popular rhetoric," Macquarie's Largey said.

Strikes would also further erode investor confidence in Africa's largest economy. The South African rand weakened against the dollar and investors pushed bonds lower on Wednesday because of the brewing labor unrest.

(Additional reporting by Jon Herskovitz in Johannesburg and Clara Ferreira-Marques in London; Editing by Erica Billingham)

Politics

REUTERS SHOWCASE

Fund Raising

Fund Raising

Flipkart raises $700 million in fresh funding.   Full Article 

Reforms Push

Reforms Push

Modi may order insurance, coal reforms if vote delayed - officials.  Full Article 

Reuters Exclusive

Reuters Exclusive

India looks to sway Americans with nuclear power insurance plan  Full Article 

To Boost Growth

To Boost Growth

Crank up public spending to revive growth - chief economic adviser.   Full Article 

Bold Steps

Bold Steps

SpiceJet rescue plan marks bold bet on Indian aviation recovery.   Full Article 

New Airline

New Airline

Tata, Singapore Air venture Vistara to take off on Jan 9.  Full Article 

Online Sales

Online Sales

Knock knock. Who's there? Amazon's best-selling holiday author.  Full Article 

Hacking Attack

Hacking Attack

N.Korea says did not hack Sony, wants joint probe with U.S.  Full Article 

Reuters Poll

Reuters Poll

BSE Sensex to hit 32,980 by December 2015  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage