Bloomberg News

Lonmin on the Precipice of a Labor Strike as Union Ruling Looms

June 24, 2013

Lonmin Plc (LMI), the world’s third-largest platinum producer, may face a strike by its biggest union, depending on a ruling tomorrow over the labor group’s recognition rights, according to analysts.

There’s “a 50-50 chance” of labor action should the Association of the Mineworkers and Construction Union be dissatisfied with the outcome of arbitration, Peter Major, a mining analyst at Cadiz Corporate Solutions, said by phone from Cape Town yesterday. “It’s really on the precipice.”

The AMCU has unseated the National Union of Mineworkers as the dominant union at the three biggest platinum producers in South Africa, which has the largest known reserves of the metal. The change isn’t yet formally recognized by Lonmin, which favors allowing its workers to belong a choice of unions.

Rivalry among mine unions has contributed to some of the worst labor violence South Africa has witnessed since the end of apartheid in 1994. In August, police killed 34 protesters at Lonmin’s Marikana platinum mine during a strike that formed part of a wave of labor disruptions for the industry.

The Commission for Conciliation, Mediation and Arbitration in Johannesburg will rule tomorrow on what recognition rights the AMCU is entitled to at Lonmin. The union speaks for more than 70 percent of the lower-skilled workers at the company and also wants to lead negotiations for higher-skilled employees, where it has fewer followers.

“AMCU are asking for a bit too much representation,” said Michael Kavanagh, a Cape Town-based metals and mining analyst for Noah Capital Markets. “My base-case assumption is that the representation agreement will end up looking similar to that which Lonmin had with the NUM previously,” he said, with Amcu’s recognition limited to the lower-skilled segment.

Union Deaths

The NUM and two other unions, Solidarity and UASA, hold recognition agreements for skilled workers at Lonmin, and each has membership of more than 20 percent of employees in that segment.

Members of both the AMCU and the NUM unions have been shot near Lonmin operations in the last few months, an AMCU member while he watched football in a tavern, according to local reports, a NUM official at an office. Last week vehicles bearing the logo of Protea Coin Group Ltd., a closely held Centurion, South Africa-based security and surveillance company, patrolled a housing area at Marikana.

Lonmin wouldn’t speculate on the likelihood of further conflict over union recognition.

“We remain committed to the arbitration process and believe the outcome will be in the best interests of all,” Sue Vey, a Lonmin spokeswoman, said in an e-mailed response to questions.

Mining strikes last year caused almost 15 billion rand ($1.5 billion) in lost output and shaved about 0.5 percentage point off gross domestic product, according to the National Treasury.

Recruitment Drive

The NUM has until July 16 to regain its majority among the Lonmin workforce or lose its office and associated rights, a Johannesburg labor court has ruled.

While the union has started a recruitment drive at Lonmin shafts to regain support, its primary goal is to hear worker concerns, Luphert Chilwane, a NUM spokesman involved in the campaign, said by mobile phone. “The majority of them are expressing that they’re tired of the violence and they want it to end,” he said.

AMCU said June 13 it was postponing a threatened strike over recognition rights to give the government time to ‘understand the challenges’’ the the group faces, particularly at Lonmin. “For us the arbitration is just a matter of time wasting on the part of the company, but we’ll attend the arbitration,” Jimmy Gama, AMCU treasurer, said by phone yesterday. “We have our own way of approaching this matter.”

To contact the reporter on this story: Paul Burkhardt in Johannesburg at

To contact the editor responsible for this story: John Viljoen at

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