Strike Effects linger and reduce GDP Growth to 1.6%

Mamsi Ngobeni sat alongside the main road of the platinum belt town of Marikana, hunched over a table with a pile of onions, apples, loose cigarettes and tomatoes. By just afternoon she had sold about $1.8245 worth of goods, well down from what she said was her usual R1 000 take before a five-month strike against the world’s top platinum producers drained this gritty town of cash.

Although miners here have been back at work since June with higher wages and the strike-hit operations of Anglo American Platinum [JSE:AMS] and Lonmin [JSE:LON] are back at full production, money is not gushing back into local businesses. South Africa’s economy is also struggling to shake off the shock of the strike, the longest in its history, and will only manage growth of 1.4% this year, down from the 2.7% predicted in February. Finance Minister Nhlanhla Nene cited “labour market disruptions” as a key reason for the revision.

In Marikana, where 34 striking miners were shot dead by police during a wildcat strike against Lonmin in 2012, the length of this year’s stoppage has left many miners cash-strapped despite wage hikes of up to 20% as they have to repay debt that piled up when they didn’t have a pay cheque. “What were we going to do? We are surviving on loans,” said 55-year-old Lonmin miner Mikasi Mabunda. He said he was now forced to pay more interest on his loans because he missed payments during the strike and the increase in his monthly wage has had little impact on his life.

“It’s not easy, the money is still not enough,” he said outside his corrugated-iron shack in a shantytown near Lonmin’s Marikana mine, 110 kms north-west of Johannesburg.

h3. Ripples beyond the Platinum Belt

The strike by the hardline Association of Mineworkers and Construction Union (Amcu) capped three years of violent labour unrest on the platinum belt and the aftershocks will long be felt as investor confidence has been badly shaken. “Investors took a huge knock with these platinum companies and the long strike,” said George Glynos, managing director at financial consultancy ETM. “It’s going to take a lot for them to put more faith in the South African economy and the mining industry.”

Amplats, the world’s largest platinum producer and a unit of global mining house Anglo American, has signalled its intention to sell off its labour-intensive operations as it pivots to mechanised mining. The company says such plans were in the making before the strike but the waves of labour unrest have clearly focused the mines of Anglo investors and accelerated the process.

Amplats said on Thursday that the strike and subsequent ramp up had resulted in production losses of 532 000 ounces, worth about $675m at current prices.

Impala Platinum, also hit by the strike, will give a production update next week but the combined industry losses are estimated to be at least 1.2 million ounces.

Platinum is a key export earner for South Africa and such losses can have a direct impact on the rand currency and the country’s current account deficit, which is expected to remain dangerously wide at around 5.6% of GDP this year.

Prices for the precious metal used for emissions-capping catalytic converters in automobiles remain depressed and not far off five-year lows, adding to the woes of the industry and the wider South African economy.

Back in Marikana, Ngobeni said her apples and other fruit fly off the table just once a month, when miners get paid. Otherwise, she has virtually no business.”People just walk past, they don’t buy,” she said.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top