[miningmx.com] – HOW serious is this year’s labour crisis at South
Africa’s platinum mines to the sector’s long-term investibility? Putting aside the
violence that we’ve seen on the mines, it’s likely that investors will absorb what has
gone on. Eventually.
Already, plans for new platinum exploration are being put in place. Today, it emerged
that billionaire mining entrepreneur Robert Friedland is preparing a $307m listing of
Ivanplats in Toronto – it’s a company with platinum and nickel assets in South Africa
as well as copper in the Democratic Republic of Congo (DRC). A day earlier, a circular
detailing the listing of Sable Platinum was issued to shareholders. Geological
coincidence or the caprice of a Creator-God, the fact is that most of the world’s
platinum is here (or in Zimbabwe).
On the ground, meanwhile, South African platinum companies have some serious
adjustments to consider to ensure tomorrow’s investment capital.
One adjustment will be a step change in labour costs. Another is the likelihood of
more complex labour relations and wage negotiations. Finally, in its normal ham-
fisted manner, the South African government has made known its view that
employers are to blame for the social distressed expressed this past month by
communities in Rustenburg and Brits.
This may mean that mining companies will have to bear up to increased scrutiny of
their social and labour plans whether the municipalities that they co-operate with are
able to implement the initiatives or not. Expect the South African government to
become a strenuous taskmaster in respect of social and labour targets in terms of
meeting the demands of the mining charter by 2014.
It’s likely, however, that investors will accommodate these things over time and not
just because of South Africa’s dominance in producing platinum, which will enable the
country’s sector to recover the higher wage costs over time.
The fact is that investors interested in commodities know their judgements are
vulnerable to shocks of a socio-political nature, a perspective partly informed by the
fact the world’s most prospective mining regions are in developing economies.
In the last six months, for instance, riots in Peru have held up gold mining activities,
while guerrilla tactics in Colombia has disrupted coal deliveries. The governments of
Ghana, Senegal and the Ivory Coast have all announced major shifts in mining policies
in the last seven days.
Even in the comely environs of Australia’s Queensland, force majeure in the form of
unseasonally heavy rains disrupted the coal market last year. This year, government-
enforced levies are forcing coal miners to retrench.
It’s not an easy environment in which platinum miners will find themselves, but even
with industrial action threatening as much as 40% of South Africa’s productive
platinum capacity, the downside is limited.
