Lonmin Workers Asked by Union to Return to Duty at Marikana Mine

The union representing the most workers at Lonmin Plc (LON), the world’s third-largest platinum producer, asked employees to report for duty after a wildcat two-day strike halted operations at its biggest mine.

Association of Mineworkers and Construction Union President Joseph Mathunjwa said miners should report for work tonight and tomorrow. He was addressing thousands of people wearing green AMCU T-shirts at the Wonderkop stadium, which is near the Marikana mine near Rustenburg, 120 kilometers (75 miles) northwest of Johannesburg.

The two-day walkout at the mine comes after the killing of a local organizer for the AMCU this weekend. The organization has been in talks with Lonmin over a recognition agreement after it surpassed the National Union of Mineworkers as the biggest representative of lower-category employees such as laborers and drillers.

“Other meetings and negotiations are still ongoing -- hopefully employees will return for the night shift,” Lonmin spokeswoman Sue Vey said in a text message.

The AMCU represents 70 percent of lower-level workers at Lonmin and the NUM 20 percent, according to the company. The AMCU wants a threshold for recognition of 30 percent, while the company is seeking a level of 10 percent, according to the union, which has referred recognition talks to South Africa’s Commission for Conciliation, Mediation and Arbitration. The company employs 27,000 workers and an additional 10,000 contractors.

Office Closure

AMCU members have stopped working because the NUM hasn’t honored a notice, served by Lonmin last year, for it to close its office at the mine, Mathunjwa said in an interview on Johannesburg-based Talk Radio 702.

“They are still operating, the company should close that office,” he said. “The demand has been made to management and management just blatantly ignored it.”

Mathunjwa told workers at Wonderkop stadium that Lonmin failed to call the police to investigate NUM members accused of bringing weapons to Marikana. A mass meeting has been scheduled for miners to attend tomorrow afternoon, he said, according to a translated version of his remarks.

Violence at the mine in August that erupted from a dispute over pay left at least 44 people dead, including about 34 who were shot dead by police on a single day, 70 injured and led to about 250 arrests. A lengthy strike could threaten Lonmin’s forecasts of increased output after saying this week that it plans to exceed production of 700,000 ounces of platinum metals in concentrate this year after the strikes cut volumes and raised costs.

Strike Inappropriate

“Lonmin cannot stand another five days of unprotected strikes; we are going to see retrenchments,” NUM General Secretary Frans Baleni said in a Cape Town interview. “It is inappropriate that workers will go on a strike to demand the closure of another office when that union is party to a peace accord which promotes freedom of association.”

The shares erased an earlier decline, rising 2.2 percent to 270.90 pence at 3:05 p.m. in London. The company returned to profit in the six months through March from a loss a year earlier.

“After being marginalized in the past” and now with the majority of workers as members, AMCU doesn’t appear to want to negotiate, Tyler Broda, an analyst at Nomura International Plc in London, said in an e-mail. “It does look like AMCU has reached a critical mass that will be difficult for NUM to recover from.”

Production Losses

The company could lose about 2,000 ounces of platinum production a day if operations are disrupted, Edward Sterck, an analyst with BMO Capital Markets, said in an e-mailed note to clients. Lonmin has built a reasonable stockpile of metal in concentrate and the disruption of a short strike could be small, he said.

“Lonmin is fully committed to achieving a fair and peaceful resolution of the dispute, although this has yet to be achieved,” Mark Munroe, Lonmin’s executive vice president of mining, said in a statement yesterday. The company has increased the number of random weapon searches and investigated all allegations of firearms being held in union offices, he said. None have been found, Munroe said.

The rand weakened 0.2 percent to 9.2547 per dollar, the lowest intraday level since April 23.

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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