Bloomberg News

Lonmin Mineworkers End Strike at Two South African Shafts

March 06, 2013

Lonmin Strikes Halt Output as Miners Seek Union Office Shutdown

This is an undated handout photo of work at a Lonmin Plc open cast mine in South Africa. The platinum producer, 25 percent owned by Xstrata Plc, said in October it would cut spending and offer $817 million of stock to investors to meet pledges to creditors as it resumed operations after the strikes. Source: Lonmin Plc via Bloomberg

Lonmin Plc (LON), the platinum producer that suffered violent strikes last year, said miners who downed tools yesterday at two South African shafts returned to work.

“We learnt early this morning that everything is back to normal,” said Cecilia de Almeida, a spokeswoman for Lonmin who works for Brunswick Group. More than 5,800 had stayed away to demand the National Union of Mineworkers, which is jostling for supremacy with a rival union, close its representative office.

Worker tensions at Lonmin mines have resurfaced as labor groups vie to add members. Competition between unions contributed to 10 days of violence at the company’s Marikana operations near Rustenburg in August, which resulted in 44 deaths. At stake is Lonmin’s recovery from a $698 million annual loss, which led it to cut expansion plans and renegotiate debts.

The Association of Mineworkers and Construction Union, rivaling the NUM, now accounts for about 51 percent of membership at Lonmin, according to the company’s Executive Vice President for Processing Natascha Viljoen. AMCU membership more than doubled in October, Lonmin said in a Jan. 14 report.

The AMCU is awaiting an agreement to recognize its majority, according to Viljoen. The NUM, which used to be the dominant union at Lonmin, now represents about 30 percent of workers, she said.

Union Power

The union with the most representation is empowered to negotiate labor terms. Rock-drill operators who sought to engage directly with the company last year, independently from the NUM, were unable to do so because labor agreements didn’t allow it, Viljoen said.

No incidents of violence were reported as Lonmin’s Newman and Saffy shafts in Marikana were suspended yesterday, said Executive Vice President for Mining Mark Munroe. Saffy produces 260 saleable ounces of platinum per shift, while Newman’s output is 220 ounces, Sue Vey, a company spokeswoman, told reporters.

Lonmin fell 0.6 percent to 45.21 rand in Johannesburg trading, its third consecutive decline.

The platinum producer, 25 percent owned by Xstrata Plc (XTA), said in October it would cut spending and offer $817 million of stock to investors to meet pledges to creditors as it resumed operations after the strikes.

Annus Horribilis

“Lonmin has put that ‘annus horribilis’ behind it and we further believe that the market has not given Lonmin enough credit for two years of operational improvements quietly going on behind the turmoil,” Citigroup Inc. said in a note yesterday.

The AMCU on Feb. 25 signed an agreement aimed at creating peace and stability in the country’s mining industry, four days after the NUM endorsed the plan.

Other companies affected by union rivalry in South Africa include Anglo American Platinum Ltd. (AMS), the biggest producer of the metal, which reported clashes between members of labor groups at a mine last month.

The Johannesburg-based company, known as Amplats, shut a NUM office last week and no longer recognizes the union as the majority organization. The NUM accused the AMCU of intimidation.

“It’s part of their strategy that if they get the NUM offices to close, it won’t exist,” Lesiba Seshoka, a spokesman for the NUM, said by phone. The union’s office at Lonmin’s operations, near the AMCU’s, remains open, he said.

To contact the reporter on this story: Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net


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