The Sunday News
Johannesburg — The rand touched a three-week high against the dollar on Friday, taking advantage of a generally risk-positive global environment, although a platinum strike which has hit exports poses pressure for the currency.
The rand climbed to R10,4470/$, the strongest it has been since April 11, and was at R10,4625/$ by 16:28 GMT, up 0,28 percent from Thursday’s close.
The market appeared to have priced in the risks from the political turmoil in Ukraine, while surprisingly strong US jobs data for April failed to give the dollar a sustained boost.
“The whole of emerging markets has had a bid tone for a couple of days now; there is a general risk-off feel to the market at the moment,” Rand Merchant Bank trader Jim Bryson said.
The rand would next target 10,4200 and 10,3600 per dollar after breaking through key resistance at 10,4800, he added.
On the downside for the local unit, market watchers are worried about the impact of a 14-week old strike in the platinum sector on exports, and ultimately on the current account.
“It doesn’t seem to end and that’s obviously in the background. The trade figure we had this week is a direct result of our exports falling away, so we need to sort that out,” Bryson said.
Government bonds closed slightly firmer on Friday, and yields dipped 1,5 basis points each to 8,43 percent for the 2026 benchmark and 6,765 percent for the shorter-dated 2015 issue.
Meanwhile, Lonmin Plc’s chief executive officer is surprised by the length of South Africa’s platinum strike and by the unwillingness of the old acquaintance leading the walkout, Joseph Mathunjwa, to accept “economic realities.”
“I thought I knew him very well and I thought this would not go this far,” Ben Magara, 46, said in an interview with Boason Omofaye of Bloomberg TV Africa. “We know each other but I think I am dumbfounded about why the economic realities are not dawning” on Mathunjwa and members of his union.
Magara’s Lonmin, with fellow miners Anglo American Platinum Ltd. and Impala Platinum Holdings Plc, have been at loggerheads with Mathunjwa’s Association of Mineworkers and Construction Union since January 23 when the labour group went on strike over pay. AMCU has rejected the companies’ latest offer of R12,500 rand a month by 2017, including benefits, instead demanding that amount in base pay within four years. That’s double entry-level workers’ current salaries.
“We are close enough to realise that Lonmin belongs to both me and him, his members and my employees and my investors,” said Magara, who has known Mathunjwa since 1999 when he was working at Anglo American Plc’s coal division and the union leader began his labor group at BHP Billiton Plc.
The pair put on a show of unity in August, shaking hands when Lonmin announced that the AMCU had become the majority labour group at the company.
Magara, from Zimbabwe, became Lonmin CEO in July 2013, 11 months after 34 protesters were killed by police in a single day near the company’s Marikana operations. Mathunjwa’s AMCU has surged in membership since those events and is now the dominant union in South Africa’s platinum industry.
“The only solution in this thing is for companies to come to the table and talk about how we can reach 12,500 in four years,” Mathunjwa said yesterday in a phone interview. “There is no other way.”
The strike, the longest mining labour stoppage in South Africa’s history, has cost companies almost R16 billion in lost revenue and workers R7,1 billion in income, according to the producers.
“We are doing everything to safeguard the business,” Magara said. “Cash burn, reduce it, everything else not critical, reduce it.”
Lonmin has declined 11 percent to 286,7 pence since the strike began on January 23 in London trading. Platinum is down 2,3 percent to $1,424.5 an ounce in the period. —fin24/Bloomberg
