Race against time for Lonmin

2012-09-02 21:45

Johannesburg - Talks to end a deadly strike at the South African mining operations of world No. 3 platinum producer Lonmin [JSE:LON] will resume on Monday after weekend funerals for over 30 workers killed by police.

Lonmin wants to restart production at mines idled for three weeks by labour strife which has spread from the platinum sector to bullion. Gold Fields [JSE:GFI] said a quarter of its workforce has been on strike since Wednesday.

The stakes are high for Lonmin, which has a shaky balance sheet and was battling to contain costs even before a wave of labour violence that killed 44 people, including 34 striking workers shot dead in a single confrontation by police.

The violence stemmed from a bloody turf war between the dominant National Union of Mineworkers (Num) and the small but militant Association of Mineworkers and Construction Union (Amcu) which has flared across the platinum belt.

Lonmin rock drill operators, who downed tools in an illegal strike on August 10, are demanding a more than doubling of basic monthly pay to R12 500. But other workers may also be in dispute.

“At the moment it is not clear if these demands are restricted to rock drill operators or if entry-level miners also want R12 500 a month,” said Gideon du Plessis, deputy secretary general of trade union Solidarity.

Solidarity represents skilled workers who have not been on strike. But all unions have been involved in the talks aimed at getting ore out of the ground again.

It was not clear who would take part in talks on Monday. Amcu’s leaders, who say they have been sidelined, say they will only show if they are invited.

Workers have sent their own delegates for negotiations and it is not always clear which union they are taking direction from, if any.

The talks are supposed to get people back to work with a promise to then deal with grievances. There is also hope that a “peace accord” can be reached between warring factions.

Race against time

Lonmin, which accounts for about 12% of global production of platinum which is used in emissions-capping catalytic converters in cars, is racing against time.

It has said it will likely breach debt covenants by the end of this month and may have to issue new shares to shore up a balance sheet hit by lost production and revenue. The company’s share price has fallen about 40% this year.

Investors, unnerved by the blood-letting in the platinum sector, have been shaken by the prospect of militant action spreading to country’s deep gold mines.

The Sunday Times reported workers at a mine east of Johannesburg run by junior producer Gold One [JSE:GDO] were set to strike on Monday to demand higher wages.

Gold Fields, the world’s fourth largest bullion producer, said on Friday about 12 000 workers had embarked on an illegal strike at the east section of its KDC mine in South Africa.

Company spokesperson Sven Lunsche told Reuters it was initially sparked by anger over funeral cover deductions but the biggest problem was rank and file discontent with the Num.

Analysts say the Amcu and other upstart unions have tapped into a vein of discontent with the Num, a key voting base for the ruling African National Congress which is seen as being more interested in politics and self-enrichment than the well-being of workers.

* Follow Fin24 on Facebook, Twitter and Google+.

  • asarhondo - 2012-09-02 22:12

    Pay them!

      MallyGold - 2012-09-03 07:53

      No asarhondo; paying them will send a message that murdering the opponents of their wants achieves results. Rather, advise them that their illegal actions and unrealistic demands have caused the company financial harm and the salary on offer has reduced to R9k (R1k less than current) and shall continue decreasing at R1k for each additional week that the strike continues.

      marc.rule - 2012-09-03 08:46

      Fire them all and hire people that want to work.

      james.rossouw - 2012-09-03 13:31

      And in the just world the Marketplace should determine wages. A country with high unemployment like ZIM, 95%, people are prepared to work for a pittance + food.

  • Sidney Gilroy - 2012-09-03 06:12

    Remember 1987, when 370 000 miners went on a strike and brought SA to it's knees? Back then, it was the catalyst for the Government to either go bust or give in to pressure from foreign investors to change. Who led that strike? Cyril Ramaphosa as Sec Gen of NUM. Ramaphosa is the power behind Malema. He is using the exact same tactics to unseat the current government. What is happening now is not Labour Unrest - it's a Coup. Why worry about one mine...when you can have the entire country's minerals as the head of a government who will force nationalization?

      dave.elmore.5 - 2012-09-03 12:05

      This whole mess, from start to finish stinks......who is really behind all of this? Who armed all those miners with brand new weapons....I agree there is definitely a third force behind this, and the mess up with the NPA and Zuma this weekend just adds to the feeling

  • Henry West - 2012-09-03 06:13

    Fire the lot of them there are thousands of people out there looking for a job.

      MallyGold - 2012-09-03 07:56

      Exactly! I am astounded that the company has shown such weakness. These employees are easy to replace as the skills required are minimal.

  • don.quioxte.3 - 2012-09-03 07:44

    Who writes this crap?? A strike cannot be deadly. A shooting can well be. Fire them.

  • jaco.laubscher.31 - 2012-09-03 10:45

    I honestly don't understand how these unions think. If you strike, you hurt the company financially. If you hurt the company financially, next year there is less money available for an increase. So if you want a decent increase, work harder, longer and help the company save money, not the other way around? But then again, maybe they goal is not the increase, but the display of power for political reasons, just very sad that the people who pays for it in blood is the workers.

  • pages:
  • 1