The biggest challenge facing people trying to assess the prospects for South Africa’s platinum mining industry is not labour unrest per se. Rather, the issue is trying to handle the uncertainty that has become the hallmark of labour relations on South African mines. Will there be strikes? Will they last two weeks? Three? Four? Will there be more violence? Since Marikana, SA’s once-predictable (if not exactly amicable) labour relations have become anything but. AMCU, the union that has challenged SA’s more-established mining unions and that was a key factor in the violence at Marikana, has shown itself to be unconcerned with the norms that have traditionally governed union relations with mine bosses. Faced with the new uncertainty, platinum buyers are having to decide whether or not they need to stockpile, and or hedge their platinum needs. It’s a tough new reality; David Jollie of Mitsue Preious Metals give his thoughts on the matter, and a global perspective on AMCU. – FD
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ALEC HOGG: Well, you donât have to be told that South Africaâs platinum industry is in some distress, forcing the entire global industry to take a longer view on the supply of the metal. David Jollie, who is the Strategic Analyst at Mitsui Precious Metals, is in London, and he joins us for more. David, how are the people like yourselves in the global markets viewing the labour unrest that is happening now in the South African platinum sector?
DAVID JOLLIE: Well, I think itâs quite a mixed view. Seeing some labour unrests, some strike action is not a surprise, but I think what we saw at Marikana last year and extended strikes at Amplats and Impala as well, really raised the bar in terms of the disruption you can get and made people a little bit nervous. Expecting some disruption I think is not a surprise, but the question people have is, what level of disruption that might be? Things like AMCU talking about possible strike action at the three big producers at the same time is an interesting message to send.
ALEC HOGG: Just unpack that a little bit more. How do people with perhaps more mature labour relations in their countries perceive AMCU?
DAVID JOLLIE: I think you have to view the way AMCU is seen slightly through a sort of media prism because AMCU really came to prominence last year as far as the platinum industry is concerned. Obviously, itâs been around in the coal mining industry a little longer. I think it was seen as a â if you take the phrase â rabble-rouser or a disruptive influence in what were otherwise relatively predictable industrial relations – not necessarily friendly, but predictable in some ways. Itâs interesting. This year they seem to be playing more by the rules and, as an entrenched union, a little bit more predictable but theyâre still a bit unknown. As an organisation, theyâre perhaps not as structured as the organised unions. I think that makes it a little harder to understand what they might do. No one has that experience, so I think thatâs the challenge for us.
ALEC HOGG:Â As a consequence of that, would you have producers buying forward in platinum just in case things donât go that well on the labour front?
DAVID JOLLIE: I think you have two things, really. I think at the moment youâll see producers maybe being a little cautious and producers trying to hold a little bit of metal back if they can do that, so they can definitely supply. You see some consumers showing a little bit of interest, but as I said earlier, I think many people are in a position where theyâre expecting some disruption anyway, so the fact that there will be strikes or there are likely to be strikes, shouldnât really surprise anyone. Peopleâs position for that is âshould I be positioned for a two-week strike or a four-week strike, or a strike across the whole industry?â and that is a much more interesting challenge. We havenât seen a lot of forward buying to cover that because I think a lot of the industry isâŚthe buyers are pretty well-stocked at the moment. You can guarantee that if we were two weeks into a strike, that it might feel quite different. You might see buying interest from investors as well as from consumers.
ALEC HOGG:Â Fascinating insights there from David Jollie, who is the Strategic Analyst at Mitsui Precious Metals.
