South Africa's Amplats back in profit but strikes threaten recovery

Olivia Kumwenda-Mtambo
Miners gather at Wonderkop stadium outside the Lonmin mine in Rustenburg, northwest of Johannesburg January 30, 2014. REUTERS/Siphiwe Sibeko

By Olivia Kumwenda-Mtambo JOHANNESBURG (Reuters) - Anglo American Platinum, the world's top producer of the precious metal, said on Monday it swung back to full-profit, although its recovery is threatened by fresh labour unrest across South Africa's platinum belt. Members of the hardline Association of Mineworkers and Construction Union (AMCU) walked out at Amplats and rivals Impala Platinum and Lonmin last month, demanding their monthly wages be more than doubled. Wrestling with soaring input costs and suppressed platinum prices, Amplats last year embarked on a restructuring process that saw it mothball some mines and cut jobs. Another drawn-out strike may lead to another review of its Rustenburg operations in the platinum belt, Chief Executive Chris Griffiths said. "The mines in Rustenburg are still marginal, any protracted strike may force us to re-look at the structure of the operations," he told Reuters. Mining companies have said the wage demands are "unaffordable and unrealistic." The strike has hit around 40 percent of the global platinum supply. Finance Minister Pravin Gordhan admitted on Monday that parts of South Africa's mining sector faced "huge" labour relations challenges. The parties will resume government-brokered talks this week and Griffiths said there may be progress. "I think the end of this week we will start seeing some movement. On the ground it seems people don't want this to be a protracted strike," he said on a conference call with reporters. Another labour group, the National Union of Metalworkers of South Africa (NUMSA), walked out at Amplats refineries and smelters on Monday, but the processing operations had not been affected, Griffiths said. Amplats said it was prioritising contractual commitments and had suspended spot sales because of the strike. The company reported headline earnings per share of 556 cents in 2013, a sharp recovery from a year earlier when it booked a loss of 562 cents per share on a wave of violent wildcat strikes. Amplats said it planned to keep its baseline production flat at a range of 2.3 and 2.4 million ounces in 2014. It did not declare an annual dividend for 2013. Shares of Amplats were up 1.1 percent at 447.50 rand at 0919GMT.