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South Africa’s platinum miners to resume working

South Africa’s platinum miners to resume workingThe devastating five-month strike in South Africa’s platinum industry came to an end Tuesday, as the world’s three largest producers and the union leading the strife signed a wage deal.

Anglo American Platinum (or Amplats), Impala Platinum (JSE:IMP) and Lonmin (LON:LMI), said about 70,000 members of the Association of Mineworkers and Construction Union (AMCU) will return to work on Wednesday, ending South Africa’s longest and costliest strike. The labour action reportedly caused producers to lose US$2.26 billion in revenue while workers lost nearly $1 billion in unpaid salaries.

Lonmin, the smallest of the three producers, said restructuring was “inevitable” to ensure its business remained afloat, especially while industrial demand for platinum in vehicle catalytic converters remained subdued.

The chief executives of the three mining firms said in a joint statement that the road ahead remains a challenging one, adding that it will take time for their operations to resume full production.

The settlements differ slightly by company and staff category. However the basic salaries of the lowest-paid workers will broadly rise by 1,000 rand a month over three years and staff will also receive additional benefits such as pension, housing and health insurance.

Workers will also receive back pay within seven days of returning to their jobs.

As a result of the strike, South Africa’s economy shrank 0.6% in the first quarter from a year earlier, the first quarterly contraction since 2009.  And mining analysts from J.P. Morgan estimated Monday that a total of 1.1 million ounces, or about 15% of global annual mined production, had been lost to date.

South Africa, Africa’s largest economy, holds about 80% of the world’s known platinum reserves, accounting for about 70% of global output.