Lonmin deal pressures other mining firms

2012-09-19 09:46

Johannesburg - A violent six-week strike at world No. 3 platinum producer Lonmin [JSE:LON] has come to an end with a hefty wage settlement that could stir more strife in South Africa's restive mining sector.

Lonmin's 11-to-22% pay hike deal with striking workers may be a red rag for others in an industry riven by income disparities laid bare by a wave of violent industrial action in which 45 people died last month.

As Lonmin's miners prepare to don their helmets and head back down the shafts, others are eyeing their gains greedily.

"We want management to meet us as well now. We want R9 000 a month as a basic wage instead of the roughly R5 000 we are getting," an organiser with the militant Association of Mineworkers and Construction Union (Amcu) at Lonmin rival Impala Platinum Holdings [JSE:IMP] told Reuters.

He declined to be named for fear company recriminations.

Amcu exploded onto the South African labour scene in January when its turf war for members with the dominant National Union of Mineworkers (Num) led to the closure of the world's largest platinum mine, run by Implats, for 6 weeks.

The discontent rolling through the platinum belt has found fertile ground in the shanty-towns that ring the mines.

The communities that serve the platinum companies sit side-by-side in the dusty "platinum belt" - proximity that will make the Lonmin deal a source of jealousy for workers from other mines.

Anglo Platinum [JSE:AMS], the world's top producer of the metal used for catalytic converters in cars, was last week forced to suspend its Rustenburg operations, 120 kms northwest of Johannesburg, because of the unrest.

Those mines rebooted on Tuesday but its workers will be tempted by the pay hikes achieved just down the road in Marikana, where 34 striking Lonmin workers were shot dead by police last month in the worst such incident since the end of white rule in 1994.

"The ripple effects will continue to be felt. The outcome of the negotiation at Marikana will likely set a new benchmark for mining more generally and wage costs are set to rise substantially," JP Morgan said in a research note.

Wage hikes in the mining sector have been leap-frogging inflation for years, reducing margins in the industry as productivity has struggled to keep pace.

But your typical miner has several dependents to feed and so pay rises that outpace inflation may not go far as the gains evaporate at the kitchen table. Racing food inflation due to soaring global grain prices will only stoke workers' hunger.

The gold sector has also not been spared, with 15 000 miners at the KDC West operation of Gold Fields [JSE:GFI], the world's fourth largest bullion producer, on an illegal strike.

However, unlike the platinum miners, Gold Fields and its bigger rival, Anglo Gold Ashanti [JSE:ANG], have both diversified away from their home base and now get half or more of their output from outside South Africa.

Gold Fields' chief executive Nick Holland told Reuters on Monday his company could "go on for quite some time" despite the KDC West disruption.

Platinum producers do not have this choice because 80% of the metal lies below South Africa's soil. Lonmin was brought to its knees by the strike because all of its mines were effectively shut.

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  • beki.khumalo - 2012-09-19 09:54

    Good! That was the point anyway. A reasonable living wage for hard working mine workers, they deserve it!

      Andrew2711 - 2012-09-19 10:22

      Except basic economics suggests that increasing the amount paid to each miner means there is less money available for other things so you can expect in the near future cutbacks to staff/social upliftment/CSR etc. The amount of money available in the pot has not changed, and with the huge losses caused by the strikes, there is even less now so I won't be the least bit surprised to hear of a 'cutbacks and restructuring' in the near future.

      russelmukondwa - 2012-09-19 10:55

      @Andrew2711, but remember that mine executives get bonuses of up to R1million per month (or even more). Yes, there is a difference between skills of executives and those of rock drillers, but the gap is too wide and is unjustified. Yes, these workers deserve a wage review.

      koos.meyer.52 - 2012-09-19 13:03

      Why should someone earn more because they breed like rabbits?

      mzakes.matabata - 2012-09-19 13:16

      @koos, ou maat as n mens kon geld kry vir stront praat was jy n billionaire.

  • pieter0827006294 - 2012-09-19 09:55

    This was so predictable

  • ditantane.kganakga - 2012-09-19 09:58

    it's about time, they must pay and build them houses too.

      Erna - 2012-09-19 10:17

      With salaries like that, and a housing allowance that is more than government employees get, they can build their own houses.

      darren.raath.5 - 2012-09-19 14:42

      ja i agree! while theyre at it why dont they:build them 3 bedroom houses;give them allowances for food,beer,alcohol,education,cigs,etc etc. free water, free electricity ,free transport,free motor vehicles,free free free... f.i.t why dont they just get given everything for free while were at it.

  • veldt66 - 2012-09-19 09:59

    Slave wages must be ended.

      pieter0827006294 - 2012-09-19 10:04

      If everyone did this, your taxi, food, petrol, insurance, housing etc will get more expensive. Don't you realize that it will affect YOUR pocket as a consumer?

  • mehluleli.majajini - 2012-09-19 09:59

    Someone we all know, will now go to the other mines and say to those mine workers" see I made the others get a huge increase, now let us soldier on and fight for economic freedom as the other mines have got lots of cash to give to you as well..." Watch the space. Fat-Lema wants to cripple our economy

  • lawrence.ntuli.35 - 2012-09-19 10:00

    Exactly what I thought would happen - now everyone else will climb on the bandwagon. They should have been fired!

  • denis.dendrinos - 2012-09-19 10:04

    "Wage hikes in the mining sector have been leap-frogging inflation for years, reducing margins in the industry as productivity has struggled to keep pace. But your typical miner has several dependents to feed and so pay rises that outpace inflation may not go far as the gains evaporate at the kitchen table. Racing food inflation due to soaring global grain prices will only stoke workers' hunger. " My salary has been lagging well well behind inflation, but then again I don't have 6 kids and two wives and a gogo to feed. And as always, the workers get paid more and more but production every single industry where the unions are active.

  • deon.louw.7505 - 2012-09-19 10:08

    Nothing good comes from violent illegal strikes.

  • carolyn.dewrance - 2012-09-19 10:09

    Well now that this is sorted out, lets move on there must be other news to report, 6 weeks of this is now enough.

  • Erna - 2012-09-19 10:17

    A precedent has been set here - and its going to cause a lot of repercussions. Violent strike = winning

  • loo.steyn - 2012-09-19 10:25

    We need Margaret - Helen ,, wish you were president. This can topple our economy if not controled

  • zwelithini.gagayi - 2012-09-19 10:32

    This is the indication that the mine bosses have realised that they have been underpaying the workers, otherwise they would not have offered 22%. Let's hope they are not going to retrench them next.

  • thepatrickwinter - 2012-09-19 10:38

    The next mine that has strikes needs to deal with this in a completely different way from Lonmin, to stop the snow ball gathering everything in its path. There is still time to correct this, but another blunder will open the flood gates.

  • Lesetja Sema - 2012-09-19 11:03

    Gold field don't care and u know y, dey took almost all de mineral in Mzansi. know gold is deep underneath de earth & is to expensive mine. is unlike platinum mines, dey dont hv much choice since 80% of platinum is from here. If u hv listen to de one of dey speakers in de morning of SAFM u could sense dat he is arrogant & dey dont care. dey will eventually shutdown de mine & go if de strike continues. Viva Freedom Charter Viva

  • tshepo.maganedisa - 2012-09-19 12:43

    Push for yours too, i would also like to see all those communities living in appalling conditions to resume with their service delivery protest, somehow this government only understands that language (taking to the streets)

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