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Lonmin Plc (LMI) backed down from a threat to fire striking workers as it struggles to balance the need to calm a conflict that has led to 44 deaths at its biggest mine and revive output to help meet debt obligations.
“A deadline or ultimatum is not helping anyone,” Mark Munroe, the executive vice president for mining at the world’s third-biggest platinum producer, said on Johannesburg-based Talk Radio 702 today. “We strongly encourage people to come to work as soon as possible. There is a lot of action you can take before you dismiss someone.” Lonmin had given striking rock- drill operators until today to return or face dismissal.
Police shot dead 34 people near Lonmin’s Marikana operation, about 100 kilometers (62 miles) west of South Africa’s capital, Pretoria, on Aug. 16 after a group of about 3,000 protesters gathering on a hill refused to disperse. Ten people, including two police officers, were killed in clashes around the company’s property the week before. President Jacob Zuma declared a national week of mourning Aug. 17.
The shares snapped six days of declines, adding 2.6 percent to 626 pence by 11:30 a.m. in London.
The company agreed with government ministers that no ultimatum for employees to return to work would be issued because of the president’s announcement, Police Minister Nathi Mthethwa told reporters in Rustenburg yesterday.
“There is nothing like a threat of an ultimatum that is going to happen in this week of mourning,” Mthethwa said.
Thirty-three percent of the 28,000 workers at Marikana reported for duty compared with less than a third yesterday, spokeswoman Susan Vey said by mobile phone. Output at the Marikana site was at a standstill today as 19.5 percent of rock- drill operators came to work, up from 17 percent yesterday.
“When teams in part of the workplace are not all present” they can’t produce, she said.
About 3,000 drillers started the illegal stoppage on Aug. 10, demanding higher pay.
Workers who don’t return today “are in trouble,” Munroe said. Lonmin doesn’t want to “declare a public holiday for the next five days” and plans to return to normality, he said.
The disruption will crimp revenue needed to fund operations and service debt. Lonmin may have to consider raising $1 billion by issuing stock to current shareholders, Societe Generale SA said on Aug. 16. The mine operator, like other South African producers of the metal, was already grappling with higher wage and power costs and lower prices.
“If we need to we’ll raise funds in the most appropriate manner,” Lonmin Chief Financial Officer Simon Scott said in an interview yesterday. The timing on any announcement on potential financing “depends how the situation unfolds” and when workers return, Scott said.
With each day of strike action, Lonmin is losing about 2,500 ounces of platinum, used in jewelry and auto catalysts, and an estimated $3 million, Absa Capital said on Aug. 17.
The Marikana mining complex accounts for 96 percent of Lonmin’s output, according to its annual report.
“What you might see is a limited restart” of production this week, Alison Turner, an analyst at Panmure Gordon & Co., said by phone from London today. “Is it likely that they’ll reach full capacity this week? I think that’s highly unlikely.”
Earlier this year, fighting between union members at Impala Platinum Holdings Ltd. (IMP)’s operation near Marikana led to the closure of the world’s largest platinum mine for six weeks and four fatalities. The company lost more than 120,000 ounces of output in the strike that started in mid-January.
To contact the reporters on this story: Matthew Hill in Johannesburg at firstname.lastname@example.org; Carli Cooke in Johannesburg at email@example.com
To contact the editors responsible for this story: Antony Sguazzin at firstname.lastname@example.org; John Viljoen at email@example.comThirty-three percent of the 28,000 workers at Marikana reported for duty compared with less than a third yesterday, external spokeswoman Susan Vey said by mobile phone. Photographer: Stephane de Sakutin/AFP/Getty Images