Prepped for long strike

South Africa's major platinum producers have built up stocks that will last eight weeks in an attempt to help them weather the strike that has crippled their operations.

Anglo American Platinum (Amplats) and Impala Platinum, the two biggest producers, can continue to fill customers' orders for six to eight weeks, spokesmen for the companies said.

Lonmin, the third-biggest producer, stockpiled 42000oz of unrefined metal in the year to September and 13000oz of unsold refined platinum, it said.

The company would not say for how long demand could be met.

"These strikes have been coming for some time and the companies have been preparing for them for 12 months-plus," said Justin Froneman, an equity analyst at SBG Securities.

"They're ready for this to drag on for a long time."

The strike is costing the companies 9900oz a day in lost production - more than R150-million at current prices.

At least 70000 members of the Association of Mineworkers and Construction Union (Amcu) began striking last week, demanding that entry-level wages be more than doubled to R12500 a month.

Talks between the mining companies and the union have resumed in Pretoria, Amcu president Joseph Mathunjwa said yesterday.

At yesterday's session producers talked mostly among themselves and less to the union, according to Amcu treasurer Jimmy Gama.

"Nothing much in terms of proper negotiations took place."

The platinum producers have called the union's demands "unaffordable and unrealistic" and Mathunjwa last week warned of "marathon negotiations".

Platinum has climbed 3.6% to $1421.38/oz since the beginning of the year amid concern that supplies will be disrupted by the strike.

"We should be okay for six to eight weeks," said Johan Theron, a spokesman for Impala.

"We are communicating with customers and they are implementing their own mitigating measures as well."

Moody's Investors Service said in a note published earlier this week: "We don't see a temporary loss of production as a major credit risk for Amplats, given that it has considerable stockpiles of platinum above ground."

The strike might be credit-positive in the short term because Amplats can sell its stockpiled platinum at a higher price, Moody's said.