Northam takes impasse public in open letter

[miningmx.com] – NORTHAM Platinum said its viability would be plunged into doubt were a strike over wages – due to enter its fourth week – allowed to continue, or it agreed to union demands.

In an open letter published in weekly newspaper, City Press – an extraordinary public demonstration of its concern – Northam management has called on the National Union of Mineworkers (NUM), and workers, to accept its 8% to 9% wage offer for employees at Zondereinde mine.

Northam also drew a line in the sand saying its offer was final. It would appear that by taking the matter public, Northam is also hoping to its letter will have a direct resonance with workers.

“Northam’s offer has been revised by the company three times. It is the final offer. Any further movement of the offer will put the company’s future at risk,’ said Glyn Lewis, Northam CEO, and company GM, Danny Gonsalves. The open letter is also due to be published in Business Day on November 25.

They called on the NUM and workers to “save’ the company.

Some R200m in revenue had been lost since NUM called the strike on November 3. Including fixed costs, and a depressed platinum price, the strike could result in retrenchments.

“A higher cost base would reduce the company’s profitability which is already strained by weak economic fundamentals, and will – ultimately – affect jobs,’ Northam said.
The NUM is demanding an increase for non-core employees of R2,000 on basic wages (equivalent to 22% – 42% at the lowest levels) and an increase for core employees of R2,100 on basic wages (equivalent to 23% – 43% at the lowest level).

Northam spokesperson Rene Rautenbach told Miningmx on November 13 that if it were to agree to R12,500 per month in basic minimum wages it would take the company 50% longer each month to cover the cost of labour; that is, 12 days instead of six days currently. One month of no production would delay positive cash flows by up to six months, he said.

It also said that employees had lost some R30m in wages and the future benefits of Northam’s Employee Profit Share Programme would be affected by the strike. NUM speaks for about 80% of employees at Zondereinde.

The company recently raised R600m in a claw-back rights offer, and restructured debt for another R400m. Coronation Asset Managers analyst, Neill Young, said the refinancing would give Northam some firepower to withstand a protracted strike at the mine.

However, Northam said that South Africa’s position in the platinum market was also in decline and it could not be expected that lower production from the country would necessarily results in an increase in the platinum price.

“Lately the market seems to be immune to the supply disruptions in South Africa and metal prices have remained static. This is largely owing to South African producers’ dwindling influence where we once dominated,’ it said.