Anglo American platinum loses $126 million over strikes

The world's top platinum producer Anglo American announced $126 million in lost revenue due to a month-long illegal strike, as ratings agency S&P downgraded South Africa over the mining unrest. Anglo American also declared a force majeure in its chrome deliveries as a result of the wildcat strike by thousands of its workers. The strike "will adversely affect the company's delivery obligations regarding the supply of chrome ore and as a result force majeure notices have been issued to its chrome customers", the company said in a statement. Its ability to deliver other metals including platinum and palladium "remains unaffected at this stage". The group has over the past four weeks lost 67,000 ounces in production of platinum, the equivalent of around 1.1 billion rand ($126 million, 97 million euro) in revenues. Meanwhile, Standard and Poor's slashed South Africa's sovereign debt rating on Friday by one notch from BBB+ to BBB, citing the strikes affecting Anglo American and other mining companies. The rating is a notch lower than that recently assigned to the country by Moody's. "In our view, the strikes in South Africa's mining sector will likely feed into the political debate in the run-up to the 2014 elections, which may increase uncertainties related to the African National Congress' future policy framework," the agency said, following in the tracks of Moody's, which downgraded the country last month. "We also expect that South Africa's underlying social tensions will increase spending pressures and reduce fiscal flexibility for the government," it said. Around 28,000 of Anglo American's workers have been on a wildcat strike for four weeks at its sprawling facilities in Rustenburg, which account for around a quarter of world platinum production. A week ago the company sacked 12,000 of the striking miners. Investors have warned the dismissals could deepen a crisis that has already paralysed an industry that accounts for around 20 percent of the continental powerhouse's GDP. Work stoppages in South Africa started in August with workers downing tools at Lonmin platinum mine. Since then, more than 50 people have been killed in rolling strikes that have frequently turned violent. President Jacob Zuma held talks with the main Cosatu trade union movement and business leaders on Friday aimed at curbing the industrial actions, but these ended without concrete decisions. Razia Khan, analyst with Standard Chartered Bank agrees with S&P's "concern that uncertainty over the likely formulation of policy alone is sufficient to act as a drag on business confidence" in Africa's wealthiest economy." "With South Africa's politics being tested in perhaps the most significant way since 1994, it is difficult to see what reassurances can be given to provide confidence with a much-needed boost," said Khan. Meantime at another Anglo American mine, Kumba Iron Ore, more than 100 wildcat strikers have occupied a mine dump at its operations in the Northern Cape. They have seized heavy duty mining equipment worth more than 3.3 billion rand threatening to destroy it if their pay demands are not met. The company said there is already a two-year wage agreement that was concluded two months ago with two main unions, the National Union of Mine Workers (NUM) and Solidarity and that it will not enter into any other wage talks.