The impact of the 2014 platinum mining strike in South Africa: An economy-wide analysis

Abstract

In this paper we measure the economy-wide impact of the 2014 labour strike in South Africa's platinum industry. The strike lasted 5 months, ending in June 2014 when producers reached an agreement with the main labour unions. The immediate impacts on local mining towns were particularly severe, but our research shows that the strike could also have long lasting negative impacts on the South African economy as a whole. We find that it is not the higher nominal wages itself that caused the most damage, but the possible reaction by investors in the mining industry towards South Africa. Investor confidence is likely to be, at least, temporarily harmed, in which case it would take many years for the effects of the strike to disappear. We conduct our analysis using a dynamic CGE model of South Africa.

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“…However, productivity losses associated with strike actions indicate likely impacts. For example, although this is narrow, the 2014 platinum mining strike in South Africa led to a reduction of 0.72-0.78% in the country's real GDP [23]. It is undeniable that the total cost of any temporary closure or staff leave granted by firms and other private establishments will exceed that reported for the platinum mining strike, especially in many African countries where informal work dominates.…”

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“…The Nkomati Nickel Deposit is hosted by the Uitkomst Complex, which is a satellite intrusion of the Bushveld Complex. The deposit is located 50 km east of the Eastern Limb of the Bushveld Complex and measures about 10 km by 800 m [43]. The mafic-ultramafic intrusion is up to 750 m thick and hosts large quantities of base-metal sulfides containing, Ni, Cu, Cr and PGE.…”

“…The Southern African mining industry faced severe strikes in 2012 and 2014 resulting in the loss of lives, cancelation of thousands of working contracts, increasing costs and a strong decline in production volumes. Apart from loss in production, the disruption of Pt supply might have raised concerns with investors and importing countries [43,134]. The increase in production inputs combined with the need of hoisting and processing larger quantities of material will ultimately increase production costs.…”