Lonmin Worker Turnout ‘Low’ After 10 Killed at Mine

Lonmin Plc (LMI) employees turned out in “low” numbers at the Marikana mining complex in South Africa a day before a company ultimatum for striking miners to return to work and after clashes left 10 dead, including two policemen.

Turnout is “still very low,” Barnard Mokwena, the executive vice president of human capital at the world’s third- biggest platinum producer, said by phone today.

Most Lonmin mines are running on essential services, the company said yesterday, with production severely disrupted since Aug. 10 by an illegal strike, followed by riots and shootings at Marikana in North West province. It produced 96 percent of the company’s platinum group metals in concentrate in 2011. Lonmin plans to issue an ultimatum to about 4,200 rock-drill operators to return to work by tomorrow, Mokwena said yesterday.

South African mines are being rocked by a deadly turf war as the Association of Mining and Construction Union recruits workers in an effort to break the grip on the industry of the dominant National Union of Mineworkers. Impala Platinum Holdings Ltd. (IMP) halted its operations at Rustenburg, the world’s biggest platinum mine, for six weeks as the unions battled for control.

Union Rivalry

Lonmin said Aug. 14 union rivalry was behind incidents at its Western mine, part of the Marikana operations.

Two security guards were killed at Western, an employee was hacked to death on his way to work and another found dead with five gunshot wounds. Two police were killed and one critically injured, while three suspects died, in a protest at a hostel. Another body was discovered in the area yesterday, police said.

There were still as many as 3,000 people gathered at a rocky outcrop on the outskirts of Marikana this evening, police spokesman Dennis Adriao said.

“Our concern is that they have weapons,” including sticks and knives, he said by phone. Both unions have addressed the gathering, Adriao said.

Lonmin and the unions say they haven’t received a list of demands from workers.

The AMCU plans to boost its membership at Lonmin to a level where it gets the legal right to bargain with management over conditions. The union needs to recruit more than 35 percent of skilled and semi-skilled workers, Abey Kgotle, Lonmin’s executive manager of external affairs, said yesterday. It has 5,000 members, or 21 percent of employees at Lonmin, while the NUM represents more than 12,000 of a total of 28,000, he said.

The NUM, with about 300,000 members, is the biggest affiliate of the Congress of South African Trade Unions. Cosatu helped South African President Jacob Zuma oust his predecessor.

Job Losses

Conflict at mines in South Africa, producer of more than three-quarters of the world’s platinum, is hitting companies’ profit, already undermined by a slump in international prices and a global supply surplus that Stanlib Collective Investments Ltd. fund manager Kobus Nell estimates at more than 500,000 ounces this year. Producers have cut capital spending and closed mines as increases in labor and power costs outpace inflation.

The government, concerned job losses will add to the 25.2 percent unemployment rate, is seeking ways to help the industry.

Mines Minister Susan Shabangu condemned the violence.

Platinum has declined 23 percent over the past 12 months, trading at $1,394.75 an ounce by 4:41 p.m. in London.

Price Decline

Lonmin retreated for a third day, losing 1.9 percent to 695 pence and taking its drop in the past five days to 8.4 percent, by the close in London and making it the worst performer on the FTSE All-Share Mining Index (FAMNG) in the period after Eurasian Natural Resources Corp., which has lost 11 percent.

“I suspect that the production loss so far has not been that significant,” Edward Sterck, an analyst at BMO Capital Markets Ltd., said by phone from London. “The irony is that these production disruptions reduce supply. I’m sure they are doing nothing for the unit costs of the producers but in terms of supply for the market, maybe in the mid-term, it will improve the price outlook.”

To contact the reporter on this story: Matthew Hill in Johannesburg at mhill58@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

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