ANGLO American Platinum (Amplats) has signed a five-year wage agreement with unions that will increase the total labour cost to company 6.6% on average over the period.
It said in an announcement today the agreement was signed with 90% of unionised employees including those affiliated to the National Union of Mineworkers (NUM) and the Association of Mineworkers and Construction Union (AMCU).
The new wage agreement, that includes UASA, is across all relevant employees and will be implemented from July 1, Amplats said.
“We believe this multi-year agreement will enable our business to remain sustainable through PGM (platinum group metal) price cycles, while also ensuring that our people are rewarded for their work as we seek to deliver enduring value for all our stakeholders across society,” said Amplats CEO, Natascha Viljoen.
South Africa’s producer inflation surged to a record high in April. Prices of final manufactured goods rose by 13.1%, from 11.9% in March, said Bloomberg News citing data from Statistics South Africa.
That’s the highest rate since the start of 2013, when the statistics office split its producer price index and started reporting five different measures for prices at the factory gate including agriculture, mining, electricity and water and intermediate manufactured goods, the newswire said.
Earlier this month, ratings agency Moody’s said inflation in South Africa was set to rise to 8% this year, overshooting the central bank’s target amid the global impact of the Ukraine conflict and rising U.S. interest rates.
Amplats did not disclose further details but according to RMB Morgan Stanley a wider aspect of the wage agreement is that it could include a new share ownership plan. It “… could well form part of/be ancillary to this round of wage agreements,” the bank said.
The settlement is good news to investors who have enjoyed strong returns from producers over the last two years. Record profits from Amplats and Impala Platinum (Implats) might not be repeated this year, however owing to rising inflation.
An extended strike would be the last thing the sector wants. According to a report by Bloomberg News, wage discussions were also progressing well with Implats. Its spokesman Johan Theron said negotiations had been “constructive”.
“It’s in everybody’s interest to secure an agreement for an extended period of time,” Theron added. “It helps bring stability and the employer knows what the labour cost is going to be. It’s easier to make long-term plans.”
Northam Platinum signed a five-year agreement last year at about the 6.5% level while South Africa’s other major PGM producer, Sibanye-Stillwater, is due to begin its PGM wage negotiations on June 1.
Sibanye-Stillwater joins the negotiating table at a time when a strike at its gold mines is headed for a fourth month.
Relations between it and the NUM and AMCU are not strong at the moment as a result of strike tensions, but Sibanye-Stillwater has asked for the Commission for Mediation, Conciliation and Arbitration (CMMA) to step in. The company said it would abide by the CCMA’s judgement on the stand off.