The wage strike in the platinum sector is entering into its sixth week, with mining bosses Chris Griffith, Terence Goodlace and Ben Magara having reached a stalemate with the Association of Construction and Mineworkers Union (Amcu). Anglo American Platinum (Amplats), Impala Platinum (Implats) and Lonmin have advised that negotiations will under the auspices of the CCMA this week.

Meanwhile, though, what is the message that South Africa is sending to investors?

“There are 200 countries that have attractive investments right now. South Africa isn’t just one out of five or twenty – we are one out of 200,” says Peter Major, Cadiz Corporate Solutions head of mining. “You have to go out of your way to bring investment and we seem to be going out of our way to chase investment away.”

He attributes this to the labour unrest in the sector. “Each time you there is a strike, it brings damage to the company and costs a lot of money. But the worst part is the perception amongst all investors, local and especially overseas, that they should away from the sector and the country. That’s where we are heading,” Major warns.

Northam Platinum provided a clear illustration of the negative effects of prolonged strike action, when the company reported its first operating loss since 1998 following the 11-week strike at its Zondereinde mine, one of the longest in the South African labour environment.

Similarly, as a result of labour action in 2012, Anglo American reported a 29% drop in output that year.

This threatens to affect not only the balance sheets of affected companies, but also South Africa’s economy as a whole. The rand has already weakened considerably, as uncertainty in the sector has contributed to the pressure on the currency. Furthermore, since the strike began, R4.4 billion has been lost in revenue, while employees wage losses total R1.94 billion.

The extent to which strikes will impact export levels and as a result the South Africa’s current account deficit is still unknown, but the mining sector is expected to remain “under pressure,” South Africa’s Reserve Bank has said.

By: Vicky Sidler