Ayanda Mdluli
2 minute read
3 Apr 2014
6:00 am

Amcu’s crippling strike becomes a force majeure

Ayanda Mdluli

A second giant in the platinum belt has declared a force majeure, as it can no longer keep up with its contractual obligations to pay suppliers as a result of the 10 week long strike that has gripped the big three producers in the region.

Picture: Neil McCartney.

Anglo American Platinum, the world’s biggest platinum producer said on Tuesday it had declared force majeure on its contracts with companies that supply goods and services, making it the second giant in Rustenburg to take the route after Impala Platinum declared it last month when the strike was in its fifth week.

Force majeure is a legal definition for events outside a company’s control that allows terms of an otherwise legally binding agreement to be ignored.

Read more: Lonmin strike deadlocked 10 weeks later

Reuters reports Anglo American Platinum said it had sent force majeure notices to some suppliers to its South African mines, which have been hit by the longest strike in modern South African mining history.

Implats spokesperson Johan Theron said: “The legal process and provisions is also well defined in law: the mine is shut down and cannot receive any service or supplies in the current environment.”

The move will affect all contractors and suppliers associated with the Rustenburg operations engulfed in strike action.

Theron explained that the producer would stop delivery of services from the time that the force majeure notice was issued. In turn it then allows suppliers the opportunity to ensure that they can take appropriate mitigating steps in their own businesses. The real loss is business opportunities for the smaller companies doing business with the bigger mines.

The strike is costing the economy R15.8bn in production and wage losses. The Association for Mineworkers and Construction Union (Amcu) is demanding a minimum wage increase of

R12 500 over a four year period which translates into a 30% increase per annum.

The companies have offered increases of between 7 and 9% over a three year period, arguing Amcu’s demands will result in the mining companies’ collapse.

Also, talks between the producers facilitated by the Commission for Conciliation Mediation and Arbitration have failed to yield an agreement.

Last week, trade union Solidarity told Business employees who worked under contractors have had their contracts terminated.

The big three contractors at a company such as Impala are Shaft Sinkers, Triple M Mining and Platcro. These companies employ cleaners, painters, drivers, service men, general workers, miners, artisans, supervisors and managers.

It is unclear whether their contracts will be reinstated when the strike ends.

When Theron was pressed on the extent of the contract termination and the effect on employees, he said: “Their contracts are not with us … best to talk to them directly.”

He also denied that contracts could have been terminated as a result of mechanisation.

“Definitely not, we have only communicated our intention to do more mechanisation – the mines are standing, we have not been able to implement anything during the strike,” he said.