Union Turf War in South Africa Jeopardizes Platinum Supply

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With the platinum market in surplus, the unrest at South Africa’s mines — even the horrendous death of 34 striking miners at Lonmin’s Marikana mine last week — have failed to produce more than a 5 percent rise in prices.

But the deaths at Marikana are the tip of the iceberg — or maybe smoldering volcano would be a better metaphor — as this situation is only part of a much wider problem among South Africa’s platinum group metal (PGM) miners, and one that will get worse before it gets better.

Arguably the root cause of the problem is a lack of foresight among the PGM miners involved.

Some ten years ago, South Africa’s gold producers took advantage of the prevailing political climate and aggressively trimmed their payrolls while the pro-market Thabo Mbeki was president, giving them political space to cut a labor force that numbered 300,000 in 1996, but is now down to around 130,000, according to a Reuters article.

Although South Africa subsequently slipped from being the world’s No. 1 producer to 4th place, gold mining is now profitable at current prices —  many platinum mines are not.

Those were the heady days that followed the demise of white apartheid rule.

Almost two decades after black rule started in a wave of optimism, the mood is one of frustration as many miners still toil in harsh and dangerous conditions for as little as 4,000 rand ($480) a month. In the meantime, PGM mining companies have failed to invest in improving working conditions, housing or education, creating a seedbed for discontent.

In the days of apartheid, the National Union of Mineworkers (NUM) and the political African National Congress (ANC) were forged from the same movement for rights and change. In the intervening years, the NUM has been viewed by many, particularly those left behind by the changes in South Africa, as becoming part of the establishment rather than fighting against it.

For example, past NUM leaders who are now ANC heavyweights such as Cyril Ramaphosa, a business tycoon, now sit on Lonmin’s board.

Enter a rival miners’ union onto the scene: the Association of Mineworkers and Construction Union (AMCU).

Continued later today in Part Two.

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