It appears that the strike that had crippled South Africa's precious metals industry is coming to an end. Reuters reports that striking miners at Lonmin's Marikana mine in South Africa said on Tuesday they accepted a management pay rise offer and would return to work on Thursday after six weeks of mining sector unrest that shook Africa's largest economy. The cost to get back to work? A 22% hike in wages, and a corresponding crunch in corporate margins (which we hope finally clears up to all those who have been so confused for years why a surge in the underlying PMs usually tends to backfire on the miners extracting it, as labor costs surge as much if not more). "The gathered strikers cheered near the mine, 100 km (60 miles) northwest of Johannesburg, when they were informed of the 22 percent wage increase offer, a Reuters witness said." Lonmin is not alone: "In another sign that weeks of labour unrest in South Africa's platinum belt could be ending, world No. 1 platinum producer Anglo American Platinum said it had resumed its operations in the strike-hit Rustenburg area. On the news of the Marikana agreement, the spot platinum price fell 2 percent to a session low at $1,627.49/oz and the rand firmed against the dollar."
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The six-week conflict in the mining sector, which claimed 45 lives, had also ignited criticism against President Jacob Zuma and his ruling African National Congress. They face accusations from political rivals that they have neglected poor workers and sided with wealthy business owners.
"Anglo American Platinum Limited (Amplats) confirms that all of its Rustenburg operations have resumed, effective from today's morning shift," the company said in a statement.
Congratulations to South African miners for finally turning the tide against the global corporation. The question now is: how many laborers, miners and otherwise who have all the leverage in a world in which corporations have gradually fired virtually everyone but the absolutely muscle that drives corporate top and bottom-lines, will follow suit, and demand equitable treatment in a world in which the central bankers are hell bent on sending inflation off the charts.
And what happens to aggregate prices if wages around the world suddenly receive a comparable 22% upward step-function? We will let you know as we find out.