Fin24

Lonmin wage bill to rise by 14%

2012-09-21 11:42

Johannesburg - The world's No 3 platinum producer Lonmin [JSE:LON] said on Thursday its wage bill would rise 14% from October 1 because of a pay deal reached this week to end a violent six-week strike.

Lonmin, faced with soaring costs, did not give precise numbers, so it was not clear what the wage increases would ultimately cost the company. Lonmin had an $18m profit in the first half of 2012.

The company said a one-time bonus of R2 000 would be paid on or before October 1 to each worker for returning to duty.

Forty-five people were killed last month in violence unleashed by the illegal strike, including 34 shot dead by police in a single incident on August 16 near Lonmin's Marikana mine 100 km northwest of Johannesburg.

Analysts expect the company to go to the market with a rights issue to inject cash into its operations after the loss of production.

Lonmin made the announcement after markets had closed in London and Johannesburg, but its share price fell over 6% on Thursday as concerns mounted about the costs and thousands of its employees returned to work.

Much of the platinum sector in South Africa, which is home to about 80% of known reserves of the precious metal, is struggling with thin margins because of low demand and rising costs for things like power and wages.

Wildcat strike action has also spread to the world's top producer Anglo Platinum [JSE:AMS].

There are concerns that the Lonmin deal, which will provide pay hikes of 11% to 21%, will encourage other workers in a country marked by glaring income disparities almost two decades after the end of apartheid.

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Comments
  • norman.depluhm - 2012-09-21 12:28

    Could Marikana have been a sacrificial lamb? Is it possible, being that they were already nailed to the wall for margins, severely lacking in demand and already considering closing shafts, that the best way to teach a bit of macroeconomics to a large number of people was to give these guys what they want, and allow the aftermath to prove that it might not be economically viable? Being a bit of a devil's advocate here, but it's likely that a mining contraction will do just that. There are already articles on the topic and whining from the unions that it's impending...

      wim.kotze.5 - 2012-09-21 13:12

      Also thought of that for a minute - but no. A Marikana closure would no doubt be spinned in such a way as to blame the so called anti-revolutionary forces, which will likely be the version that will be believed. Take Aurora for example - the people responsible have so far eluded blame from the masses.This is even more remarkable, seeing that the Zuma family is involved: None of Zuma's many enemies is exploiting this sterling example of nepotism.It's almost as if the very poor wants to see a wealthy strongman that rides on the wealth of stealing their collective earnings. The fact that they have their one strongman that's superficially on their side somehow makes up for the fact that the strongman's wealth is built on the misery of those he is supposedly fighting for.In the unlikely event of things going well, the strongman will be worshipped. If goings go not so well, those providing the job opportunities will be charged with exploitation.

      norman.depluhm - 2012-09-21 15:00

      Wim, you're onto something there! it is as much a part of african embedded culture for the last few (many) generations, to live it up and enjoy during bountiful seasons (talking crops and livestock here, generations ago, now called tenders and contracts) as it is to allow a single leader/king/heavy-o to have it all and just bow to that in the hopes that their king will bestow some sort of niceties. Sorry, but that's just historically proven fact. And fully in line with what you're saying. Spose it also supports the notion that this culture would have no idea what I was saying short of having a proper education or some life experience and context in the modern world.

  • lemohang - 2012-09-21 12:57

    I think some people need to go back and watch bamboozled again sad that this still happens

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