Strike Hits South Africa Platinum

Updated Jan. 23, 2014 10:15 a.m. ET

Razor wire is seen outside the entrance to the Lonmin platinum mine in Marikana near Rustenburg, South Africa, Thursday. Platinum miners in South Africa have gone on strike to push for higher wages. Associated Press

JOHANNESBURG—Tens of thousands of South African platinum miners went on strike demanding higher salaries, hobbling a crucial industry even as their union said it would negotiate with employers and the government.
The Association of Mineworkers and Construction Union, the largest in the platinum sector, on Thursday said it was willing to meet with the government and the world’s three biggest platinum producers: Anglo American Platinum Ltd. AMS.JO +2.32% Anglo American Platinum Ltd. South Africa ZAc44201 +1001 +2.32% Jan. 23, 2014 5:00 pm Volume : 367,747 P/E Ratio N/A Market Cap ZAc116.50 Billion Dividend Yield N/A Rev. per Employee ZAc810,862 01/23/14 Strike Halts Platinum Mines in… 01/22/14 Platinum Hits Two-Month High a… 01/22/14 Anglo American Platinum Return… More quote details and news » AMS.JO in Your Value Your Change Short position , Impala Platinum Holdings Ltd. IMP.JO +1.35% Impala Platinum Holdings Ltd. South Africa ZAc12755 +170 +1.35% Jan. 23, 2014 5:00 pm Volume : 2.91M P/E Ratio 0.76 Market Cap ZAc79.56 Billion Dividend Yield 0.94% Rev. per Employee N/A 01/23/14 Strike Halts Platinum Mines in… 01/22/14 Platinum Hits Two-Month High a… 01/20/14 South Africa Braces for Miners… More quote details and news » IMP.JO in Your Value Your Change Short position and Lonmin LMI.LN -0.03% Lonmin PLC U.K.: London GBp320.90 -0.10 -0.03% Jan. 23, 2014 4:35 pm Volume : 2.11M P/E Ratio 0.16 Market Cap GBp1.83 Billion Dividend Yield N/A Rev. per Employee GBp35,810.2 01/23/14 Strike Halts Platinum Mines in… 01/22/14 Platinum Hits Two-Month High a… 01/20/14 South Africa Braces for Miners… More quote details and news » LMI.LN in Your Value Your Change Short position PLC.
“We have a mandate that we can meet to talk about our demands. That’s a new positive development,” said Joseph Mathunjwa, the union’s president.
Musa Zondi, a spokesman for South Africa’s labor ministry, said a date for the talks hadn’t been set.
The strike is the biggest to hit the platinum sector since the violent work stoppage in August 2012 that started at Lonmin’s Marikana mine and resulted in police firing into a crowd of protesters killing 34 people. Since then, the platinum industry says it lost 879,400 ounces of production in 2012 and 2013 combined. Companies warn that the industry is in a financially fragile state and a new strike will damage both revenue and jobs.
The work stoppage is the latest blow to an already ailing South African economy. Gross domestic product expanded by less than 2% last year, and the rand has weakened against the U.S. dollar to a more than four-year low.
Mining accounts for 6% of gross domestic product and mineral exports 60% of export revenue. In addition, companies have cut several hundred jobs because of costly strikes and a weakening demand environment in the past two years, a blow to South Africa’s already high unemployment rate of around 24%.
This week, Anglo American Platinum, the commodity’s largest producer, said earnings in 2013 returned to a profit after a loss the previous year, but a strike threatens to reverse those gains. Its chief executive, Chris Griffith, said a long strike now could also lead to more job losses.
The workers are demanding that their employers raise entry-level salaries to 12,500 rand ($1,150) a month from around 5,000 rand. Mr. Mathunjwa said he understands the damage to the economy a strike can cause but that workers need to earn better salaries as living costs rise.
Impala Platinum spokesman Johan Theron said Impala overnight shut its Rustenburg mine, which accounts for about 52% of its output, in preparation for the strike. Lonmin said Rustenburg has been quiet so far. Workers didn’t show up for the morning shift but the mine hasn’t been subjected to the kind of violence seen in previous years.
This month, South Africa passed a new act that prohibits those on strike from carrying weapons that could cause bodily harm, including spears and machetes, which had been prevalent in the 2012 strikes. Police on Thursday said they have deployed forces around the platinum-producing area, northwest of Johannesburg, to monitor striking workers and protect those not on strike.
AMCU gained dominance in the platinum sector following the Lonmin Marikana strike in 2012, which then spread to mines across the country, but cracks are starting to show. Some former AMCU members say workers are worried about going on strike and losing their jobs.
“I agree we need to get better wages, but people will lose their jobs after this strike,” said Gaddafi Mdoda, a former member of AMCU who says he left because he didn’t agree with how the union was being run. “This isn’t the time to strike.”
Write to Devon Maylie at devon.maylie@wsj.com and Patrick McGroarty at patrick.mcgroarty@wsj.com

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