JOHANNESBURG (miningweekly.com) – Employers had to set a limit on unreasonable pay demands by labour unions, African Rainbow Minerals (ARM) executive chairperson Patrice Motsepe said on Monday.

“We have to draw the line,” Motsepe reiterated in response to Mining Weekly Online during question time, after the JSE-listed black-controlled diversified mining company reported a squeezed-out 2% increase in headline earnings in the 12 months to June 30, in the face of a battering from falling nickel, chrome and platinum prices.

While companies like ARM had a broad obligation to all of its stakeholders, of which labour was a key component, it also had an obligation to remain globally competitive, Motsepe said.

“There are times when you’ve got to look your workforce in the eye and say, ‘we cannot pay you what you want’,” he added, after reporting near-standstill headline earnings of R3.45-billion in difficult market conditions, compared with R3.37-billion in 2011.

While it was to be expected that emerging unions would attract membership by promising higher pay, those unions needed to be told that companies were unable to accede to excessive pay demands and remain globally competitive at the same time.

The contribution to ARM’s headline earnings by nickel and chrome plummeted 179% and platinum-group metals by 46% in the financial year to end-June.

Although there would be times when the company would be locked in serious disagreement with its stakeholders, it remained fully committed to them, Motsepe said, adding that when it came to corporate social investment, the mining industry often failed to get the recognition it deserved.

While companies could always do more for stakeholders, he could not name a single mining company that was not committed to them.

The key for the future was to build trust among all stakeholders.

“The mining industry is critically, critically important, not only for the jobs it provides, but also for South Africa as a whole.

“We have no choice as a country but to make sure that the South African mining industry continues to be an attractive investment destination in the minds of the investors, domestically and global.

“Of course, we have a very crucial obligation to our workers and we’ve got a fundamental obligation to our shareholders,” he said.

He had no doubt that South Africa would learn from the current period of difficulty and labour unrest and that all the stakeholders would come together to ensure that the industry continued to be globally competitive.

The revenue of the R35.7-billion market-capitalised ARM increased 18% to R17.53-billion and the company declared an increased dividend of R4.75 a share, compared with the R4.50 a share in the previous financial year.