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South African platinum bosses may seek to have strike outlawed

Chief Executive of Anglo American Platinum, Chris Griffith addresses a media conference in Johannesburg February 19, 2014. REUTERS/Mike Hutc
Chief Executive of Anglo American Platinum, Chris Griffith addresses a media conference in Johannesburg February 19, 2014. REUTERS/Mike Hutc

By Ed Stoddard and Olivia Kumwenda-Mtambo

JOHANNESBURG (Reuters) - The chief executive of Anglo American Platinum said on Wednesday court action might be taken to have a four-week strike against it and other platinum producers declared illegal given alleged violence by the AMCU union.

Chris Griffith was speaking at a media briefing along with chief executives of Lonmin and Impala Platinum. Their operations have been hit by the same strike, which has no end in sight in light of the fact that the two sides remain poles apart on the issue of wages.

The walkout by the Association of Mineworkers and Construction Union (AMCU) is affecting more than 40 percent of global output of the precious metal and has further eroded investor confidence in Africa's largest economy.

Griffith said the AMCU was trying to achieve its wage demands through "through not only strike action but violence and criminal acts ... There have been extensive reports of both overt and covert intimidation at the various operations, as well as injuries and damage to property," he said.

Amplats, the world's top platinum producer, has already launched a 591-million-rand ($54 million) lawsuit against AMCU for what it says are damages its striking members have caused through violence, damage to property, and intimidation that the company says is keeping non-striking employees from working.

The stoppage itself by AMCU members has followed the letter of the law and is therefore considered a "protected" strike by South African law, which effectively means it is legal and striking employees cannot be fired for just downing tools.

But, asked if there was the possibility of also using the courts to have the strike declared illegal or unprotected because of AMCU's alleged acts of violence, Griffith replied: "It is an option that we are exploring."

It was not clear if he was speaking just on his behalf or for the whole platinum industry.

The companies also said the industry had lost $405 million in revenue so far to the strike and their latest pay offer to miners of 7-9 percent over three years "pushes the boundary of what is affordable and sustainable".

AMCU had demanded a more than doubling of basic entry level wages to 12,500 rand a month under the populist battle cry of a "living wage." Basic wages are not the whole picture, however, as miners also get production bonuses and housing and other allowances structured into their pay package.

The companies say their proposed increases would take the minimum guaranteed pay to between 9,390 and 10,250 rand a month in the first year but cannot afford more than that, with 45 percent of platinum operations in South Africa currently losing money because of rising costs and depressed prices.

Lonmin boss Ben Magara said the offer remained "on the table for now" but mounting losses from a protracted walkout could eventually see it taken off if it became "unaffordable."

NO BREAKING OF RANKS

But the trio, which have never faced a simultaneous strike before or bargained with unions under the same roof, said they were holding to a united front.

"The whole industry is in trouble and we cannot afford to break ranks," said Terence Goodlace, Implats' chief executive.

Producers are losing about 10,000 ounces a day in output to the strike and losses to date are around 200,000 ounces.

This remains a far cry from the damage inflicted by a wave of wildcat strikes across the sector in 2012. They were rooted in a vicious turf war between AMCU and the once unrivalled National Union of Mineworkers (NUM) that killed dozens of people and triggered sovereign credit downgrades.

Labor unrest in 2012 and 2013 - most of it concentrated in the first year - cost producers 894,000 ounces in lost output and 12.5 billion rand in revenue, the firms said on Wednesday.

Goodlace said that employment at the three companies fell to 134,000 from 145,000 between the end of 2011 and December 2013, and prolonged strike action "could result in further job losses and possible mine closures".

Wage demands from South Africa's mostly black mining Labor force, which is still largely drawn from poor rural areas far from the shafts, is driven by a number of factors including a long history of poor pay and demographics.

The typical mine worker in South Africa has eight dependants and often two families, which puts huge pressure on household budgets so that even above-inflation wage increases do not go very far.

But such family demands also mean that the strikers will soon start to feel the strain of no pay.

Griffith said "the pain may be felt" next week when the monthly pay day rolls around.

($1 = 10.8705 South African rand)

(Editing by Mark Heinrich)

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