PLATINUM

Platinum Mine Violence Impact—Could It Spread to Gold Mines Too?

Lawrence Williams

Last week’s massacre at Lonmin’s Marikana platinum mine in South Africa has huge implications for the country’s struggling platinum mining sector. Could it spread to the gold mines too?

The heart of the problem appears to have been the Association of Mineworkers and Construction Union (AMCU), which has been targeting the platinum mines to extend its membership at the expense of the established mining unions, the NUM and Solidarity. As part of the turf war, the AMCU appears to have targeted the mine rock drill operators (RDOs), a key part of the workforce, who are reported to be demanding more than double their current wages.

Without the RDOs there can be no production. Platinum mines are notoriously difficult to mechanize and thus employ large numbers of RDOs. There can be tribal influences at play here also, with RDOs often drawn from specific tribal groups that can be played upon by agitators.

The platinum mining sector is struggling nowadays. As the mines get deeper and hotter, costs rise dramatically and most operations are marginal at current platinum prices. Accident rates have risen and there has been an increasing degree of unrest amongst the workforce, stimulated by the inter-union rivalries.

What is particularly worrying for platinum miners and investors alike is whether these union turf wars and the associated violence will spread to other mines in the area. There is a growing suspicion that dissident factions in the ruling African National Congress have an underlying political agenda, and are behind some of the union activities.

What does this all mean for the platinum miners and platinum prices? South Africa produces some 70% of the global platinum supply. Prices are weak because platinum has been in surplus, but any major disruptions in the big mining operations could rapidly turn that into a deficit, and lead to shutdowns in some of the more marginal operations.

The issues leading to the platinum mining violence are potentially mirrored in South Africa's gold mines, and there is a real concern about the potential spread of mine unrest. South Africa is one of the world's largest gold producers, and any disruption would have a negative impact on global mine supply.

source : MineWeb