Marikana - The world’s third largest platinum producer
Lonmin [JSE:LON] shut down its South African operations on Tuesday and its
shares tumbled after violence caused by a feud between rival unions killed nine
people at its main mine.
Two policemen and two security guards were among those
killed in the clashes from Friday through to Monday.
It was the deadliest violence so far in a union membership
turf war between South Africa’s dominant National Union of Mineworkers (Num)
and the relatively new Association of Mineworkers and Construction Union
(AMCU).
Executives at Lonmin said all its shafts across the South
African platinum belt were closed down with only essential services such as
ventilation operating.
“Until the place is safe we don’t want to talk about
production,” Lonmin Executive Vice President Barnard Mokwena told a press
briefing at Marikani.
Lonmin shares dropped almost 5% in London and 4% in
Johannesburg on Tuesday.
Hundreds of police officers, including horseback-mounted
units and backed by armoured vehicles, descended on Lonmin’s Marikana facility,
about 100 km northwest of Johannesburg, to prevent any repeat of the
violence.
Police helicopters clattered overhead as officers set up
control checkpoints and laid down barbed wire. In a nearby township, a group of
men, apparently mineworkers, gathered on Tuesday carrying sticks and bars.
The platinum sector is grappling with declining world prices
for the precious metal and a surge in union militancy in South Africa, home to
80% of known reserves.
Complaints that the Num, which remains a buttress of
political and electoral support for the ANC, is
not defending the interests of its rank and file have put the longstanding
labour grouping under siege.
Aggressive new unions have been poaching Num members in
often violent turf wars. Lonmin executives said AMCU now had 21% of the
company’s 28 000-strong South African workforce as members.
Machete attack
The latest violence began on Friday during an illegal strike
held by 3 000 rock drill operators at Lonmin’s Western Platinum mine. AMCU
members clashed with Num members, and police and security guards attempting to
restore order were caught up in the violence.
Police told Reuters two policemen died after a machete
attack by a mob near the mine. Another officer was badly injured and police in
turn shot dead three protesters.
Two security guards were hacked to death on Sunday, while
the Num said one of its members was killed while trying to report for duty.
Lonmin said a fourth employee had been found dead with several gunshot wounds.
Company officials did not say exactly how much production
had been lost as a result of the latest unrest.
The shutdown makes it likely that Lonmin will fall short of
its target of 750,000 ounces of platinum this year.
“Production has been severely disrupted since Friday 10
August as a result of an illegal strike by rock drill operators and increased
incidences of violence and intimidation since then,” the company said in a
statement.
At least three people were killed in a similar round of
labour violence in January that led to a six-week closure of the world’s
largest platinum mine, run by Impala Platinum Holdings [JSE:IMP].
The violence at Lonmin’s Marikana mine echoed previous
incidents in which AMCU has tried to recruit NUM members.
Accused by detractors of using strongarm tactics that have
led to clashes and deaths, AMCU has been taking on the Num in townships and
mines. AMCU denies these allegations but says Num is no longer effectively
representing the interests of miners.
The AMCU/Num rivalry, which has already caused friction at
Lonmin’s Karee mine, has now spread to other shafts at a time when the company
is cutting back on investment plans in the face of weak demand and shrinking
margins.
The challenge to the dominance of the 300 000-strong Num
also has political ramifications given its role as a support base for the ANC.