SIBANIA-Stillwater CEO Neal Froneman said he “didn’t expect” a quick outcome from pay talks with the company’s Platinum Group Metals (PGM) mining unions due to the complexity discussions.
Salary negotiations are due to begin in about a week.
“I don’t think it will be a quick result,” Froneman said in an interview this week. “Positional bargaining is a process, especially if you want to get an inflation-linked pay rise. Maybe there’s a bit more complexity with profit sharing, which might just be the right thing for PGMs.
Anglo American Platinum (Amplats) made relatively short work of its wage negotiations by agreeing on May 26 to a five-year wage deal with unions that increased the total cost of labor for the company by 6.6% on average. Northam Platinum signed a five-year wage pact last year after agreeing to an average pay rise of 6.5%.
Consumer price inflation in South Africa hit a five-year high in May with an increase of 6.5% from 5.9% in April 2022, Statistics South Africa said.
Froneman said he believed there was little appetite for a strike among union members, especially since memories of the 2012 strike were strong. About 750,000 ounces of production were lost during the period – but more importantly, it precipitated the Marikana Massacre, whose 10th anniversary takes place in August.
“There’s little appetite, which doesn’t mean there won’t be a strike,” said Froneman, who complained that employees were “being abused” by unions due to the absence of a secret ballot.
Analysts agree that Sibanye-Stillwater’s negotiations with unions will take time to negotiate and suggest that Implats is also at risk of going on strike.
The mines involved in the ongoing wage negotiations are Implats’ Rustenburg Lease and Marula and Marikana and Rustenburg, owned by Sibanye-Stillwater. The mines employ 65,000 full-time people and another 22,000 contractors and account for around half of total employment in the PGM sector in South Africa, according to the Minerals Council.
“While the Amplats pay deal sets a pattern, we believe Sibanye-Stillwater will seek a deal more closely tied to inflation expectations,” BMO Capital Markets analyst Raj Ray said in a note.
UBS analyst Steven Friedman said the mines in the Western Branch of the Bushveld where Sibanye-Stillwater and Implats operate are deep, labor-intensive and “…are generally much less productive and non-scalable compared to their eastern/northern and Zimbabwean counterparts”. . As a result, mines generate less revenue per employee.
As a result, these mines were “more vulnerable to industrial action” as underground miners generally earn lower annual wages than machine operators in mechanized eastern branch mines and labor generally represents a larger component of the total cash costs for labor-intensive deep works. miners “… making them more sensitive to salary increases”.
The strike at gold facilities, which lasted about three months, means Sibanye-Stillwater will only see production return to normal levels in the second half of the company’s fiscal year, said James Wellsted, vice president general affairs. Unlike a gold mining strike in 2018/19, all operations have been shut down during the current strike.
“So this time we have to restore the environmental conditions, suitable for operation, and that will take some time,” Wellsted said. “We need to go underground gradually and make sure the working environment is safe for people.
“It will take time in a phased build of two to three months.”
On June 11, Sibanye-Stillwater signed a gold pay deal with the National Union of Miners and the Association of Miners and Construction Union for an average raise of 6.3% over the three years. Artisans and miners were offered a 5%, 5.5% and 5% wage increase over the period.
However, it was a difficult process that was ultimately saved after Sibanye-Stillwater agreed to extend an ex gratia payment of R3,000 to employees.