In democratic South Africa, the government allows citizens to express dissatisfaction through peaceful demonstrations. Workers are also allowed by legislation to embark on strikes when disputes with their employers arise. As often in industrial actions, the conflict primarily concerns wages – here with the mineworkers demanding an increase in their wages, often twice what they are earning.
On 23 January 2014, almost 70 000 platinum mine workers went on strike. The majority of workers were from major platinum producers such as Impala Platinum, Anglo American Platinum and Lonmin Platinum Mines based in the Rustenburg are of the North West Province. These mine workers belong to a newly formed trade union, Association of Mines and Construction Union (AMCU) under the leadership of Joseph Mathunjwa. The workers, represented by AMCU, demanded a salary increase from R5 000 to R12 000 per month from their employers. In return the platinum companies called the workers’ demands of R12 000 impractical and refused to go beyond a 10 percent wage increase.
The strikes took place in the Rustenburg area in the North West Province and affected all major platinum producers, especially Lonmin. These mines lost about 40 percent of platinum production as a result of the strike and subsequent shutdown that started in January 2014. The strike took around 440 000 ounces of platinum out of production. The three companies, Impala Platinum, Amplats and Lonmin suffered a total revenue loss of about R24.1billion during the strike and a further loss of R10.6 billion in wages. The five month long strike affected both the workers and the mining companies.
The South African mining industry shed 20,000 jobs in the 12 months leading to June 2013, and that trend was set to continue due to low margins, cost pressures and volatile commodity prices. Additionally, labour costs in the mining sector account for 45% to 50% of total cost, while the global average was 30 to 40% of total cost, with employee efficiency 10 times higher. The direct impact of the mining strike on first quarter 2014 growth was clearly evident. The Gross Domestic Product (GDP) reduction of 1.3% was reported. This resulted in an economic growth of only 0.6% in quarter 1, 2014.
During the five month strike, mineworkers’ debts increased. Without salaries, mineworkers’ dependence on credit increased and they were forced to borrow for basic necessities such as food, clothes and school fees for their children. It was reported that the average miner’s accumulated debt had increased and they were paying back R5 000 per month. Other mineworkers who had taken out loans were unable to pay their debt during the strike. Miners lost 45% of their annual income, and it would take them roughly 2.5 years to recoup it through the recently negotiated wage increase.
In May 2014, the newly appointed Minister of Mineral Resources, Ngoako Ramatlhodi appointed a task team to restart delayed negotiations and find an amicable solution. On 7 June 2014, Ramatlhodi announced that he would pull out of negotiations if a deal was not reached by 9 June 2014. In June 2014, AMCU argued for fixed wage increase over four years to meet the R12 500 goal by 2017.
On 12 June 2014, the first agreement was reached when the mining companies offered a pay increase of R1 000 per month. The offer was rapidly accepted by some workers. AMCU leader, Joseph Mathunjwa, openly announced that a deal was about to happen the following day. Though, other workers raised concerns about the length of the agreement, back pay and living allowances. The union then made additional demands, delaying an agreement.
On 18 June 2014, it was announced that AMCU was demanding a one-time R3 000 payment for every worker to pay for the strike, and the union asked that workers dismissed during the strike be hired again. The union also asked Amplats, Anglo American and Lonmin not to pursue criminal charges against workers suspected of violence during the strike. In return, the union promised the platinum companies that its members will avoid future strikes. In a joint statement, the platinum companies said the new demands would cost an additional R1 billion and were not possible to meet.
After five months of striking, both the platinum companies and AMCU settled for a pay increase spread over three years. On 23 June 2014, a deal was reached between the platinum companies and AMCU. The three year agreement stated that workers who were currently earning less than R12 500 will receive a R1 000 increase in 2014 and in 2015. In 2016, the same workers will receive a R950 increase. After the wage increases, the minimum salary would be R8, 000 a month. The mining companies agreed to avoid future job loss as they sought to operate more efficiently.
After the deal was reached and announced, there were huge celebrations throughout Rustenburg. In the mining town of Marikana, people wearing AMCU T-shirts flooded the streets. Mathunjwa called the deal a major breakthrough where AMCU.
On 24 June 2014, the deal was officially signed and workers started to return to work on 25 June 2014. It was expected that a return to full production would take three months. AMCU announced that it would continue to work to increase the minimum wage to R12, 500 by the year 2017. By the time a deal was reached, the strike had become the longest and most costly in South African history.
After the strike, Anglo American Platinum, Amplats, announced that it planned to sell four mines and two joint ventures because of the five-month long strike action. Those assets included Amplats’s Consolidated Union-Rustenburg mine in the North West Province, and the Pando JV in Limpopo Province which is jointly owned with platinum mining company Lonmin’s subsidiary company, Eastern Platinum. The Bapo Ba Mogale community owned Bapo Ba Mogale mining company, as well as the Johannesburg Stock Exchange (JSE) -listed exploration company, Mvelaphanda Resources. Amplats also considered discarding its Bokoni JV project which the company owned with triple-listed platinum company Atlatsa Resources based in Burgersfort in Limpopo Province.