S Africa warns strike-hit platinum mines could close

Last Updated: Tuesday, June 10, 2014 - 22:21

Pretoria: The South African government and its central bank chief today warned that strike-hit platinum mines could close, throwing miners out of work and rocking an already shaky economy.

The world`s three biggest platinum miners -- Anglo American Platinum, Impala Platinum and Lonmin -- have been deadlocked with strikers demanding better pay for nearly five months.

"The situation is grave," said Mineral Resources Minister Ngoako Ramatlhodi. "The longer the strike goes on the more likelihood of shafts being closed."

Ramatlhodi yesterday abandoned mediation efforts between AMCU, the union representing the striking workers and their employers after they failed to reach an agreement.

"I suspect there will be job losses, realistically," he said.

Reserve Bank Governor Gill Marcus said that even if the industrial action were to end now, it is "possible that a number of shafts will never re-open."

She warned that platinum exports would be hit hard, although the mines have "significant" inventories of the mineral, which is used to make jewellery and catalytic converters in cars.

But these stocks are being depleted and "the longer the strike continues, the sooner the adverse effects on exports will be felt," said Marcus.

The domestic economy is facing "enormous headwinds", she told a meeting in Johannesburg.

However Marcus dismissed fears of South Africa slipping into a recession, despite the economy contracting 0.6 per cent in the first quarter of this year largely because of the strikes.

"Significant further contractions off the already low bases in both the mining and manufacturing sectors", which would tip the country into a second quarter of contraction and official recession, were unlikely, said Marcus.

But she cautioned "the slowdown we have experienced is domestically driven, largely self-inflicted and we cannot blame external factors alone."

"And such contractions would have to be of similar orders of magnitude as in the first quarter."

The South African currency has been under pressure for months and ratings agencies have warned that deficits, high unemployment and slow growth may prompt a credit downgrade to junk bond status.

That could raise the cost of borrowing for the South African government and prompt international investors to look to other faster-growing emerging markets in Africa.

AFP

First Published: Tuesday, June 10, 2014 - 22:21

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