Mine strike hits S. African economy

Terrible timing

Miners gather at Wonderkop stadium outside the Lonmin mine in Rustenburg, northwest of Johannesburg in this Jan 30, 2014 file photo. As South Africa's biggest post-apartheid mine strike marks its eighth week on March 20, 2014, it is already denting growth and export earnings, and many of those affected are having to sell their most prized possessions to make ends meet. [Photo/Agencies]

For the current account, the losses will be magnified as South Africa's government embarks on a spending binge for big ticket items such as over 1,000 trains that will be imported from foreign companies like General Electric.

"There will be huge pressure on the current account from the government's infrastructure programme. So this strike could hardly come at a worse time," said Schussler.

The impact on growth will also be significant. Africa's largest economy is seen expanding at a sluggish pace of only around 2.5 percent per year, according to the latest Reuters poll of economists.

"Roughly speaking, if you look at our GDP, which is 3.6 trillion rand, then that 9 billion rand is about a quarter of a percent off economic growth already," said Schussler.

Perhaps half a percent had been lost already, he added, if the 4 billion rand in lost employee wages and the effect on companies that supply and service the mines are added.

"This means growth of 2 percent or lower," Schussler said.

Even operations not on strike, such as Aquarius Platinum's, have not been able to capitalise on their rivals' misfortunes as the strike has not had much impact on price.

Spot platinum prices are little changed since the strikes began on Jan 23 as traders bet that the availability of above-ground stocks will cushion end-users from the impact.