Rand weakens as Platinum strike continues

By on January 27, 2014

South African mineworkers’ strike pulls the rand down to the lowest it’s been in six years against the US dollar. 

South Africa’s trade in platinum has come to a stand-still with mineworkers striking for a salary increase to R12 500 per month, more than double the original wage. Miners from Anglo American Platinum, Impala Platinum and Lonmin have put down their tools and raised their voices in protest against low wages causing the rand to hit its weakest level against the US dollar for six years. Mining companies have been losing an estimated 9 900 ounces of platinum a day due to the strike.

With South Africa a leader in platinum mining and trade, the strike is damaging relations with foreign investors as well as having a negative impact on the country’s economy. “The more persistent strike action proves to be, the greater the negative impact on foreign ownership of South African equities and hence the more protracted rand weakness,” says Investec’s Chief Economist Annabel Bishop.

Anglo American Platinum, Impala Platinum, and Lonmin Chief Executives agree, stating that the continuation of the strike will hurt South Africa’s reputation as an attractive investment opportunity for foreigners. The rand weakened by 0.5 percent, meaning R11.1486 was needed to buy just a single dollar, with platinum demand also raising 0.5 percent at 1 435.44 an ounce. South Africa foreign exchange relies largely on

Finance Minister Pavin Gordon says, “Government is working very hard at mediating some of the differences between employers and labour union.”

Secretary General Jeff Mphahlele of Association of Mineworkers and Construction Union (AMCU) has agreed to meet with Labour Minister Mildred Olifant for negotiations on wages, but the outcome is still unsure. “The strike continues and we will meet for negotiations today,” Mphahlele says.

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