Lonmin Continues Mine-Reopening Plan Amid Violent Attacks

Lonmin Plc (LMI) said it will push ahead with plans to break a 15-week strike tomorrow by reopening mines even after at least four people were killed in South Africa’s platinum belt over the last four days.

“Reconsidering the opening is not an option,” Happy Nkhoma, a spokesman for the world’s third-largest platinum producer, said today by phone. “What we need to make sure is that the employees are safe.”

No violence near mines belonging to Anglo American Platinum Ltd. (AMS), Impala Platinum Holdings Ltd. (IMP) and Lonmin was reported last night or this morning, Thulani Ngubane, a provincial spokesman for the South African Police Service, said by phone. Four people were killed and another six assaulted during various attacks over the weekend and yesterday, Ngubane said in a statement.

Members of the Association of Mineworkers and Construction Union, the biggest labor organization at the world’s three largest producers, have been on strike since Jan. 23. The AMCU wants basic monthly pay, without benefits, to be more than doubled for entry-level underground employees to 12,500 rand ($1,211) by 2017, while producers are including cash allowances in that figure.

Lonmin had “overwhelming support” from employees for a return to work after the company appealed directly to miners by text message and voice mail, Chief Executive Officer Ben Magara told reporters yesterday. The producer will have to cut jobs unless employees come back, he said. “We are appealing for peace, we are appealing for tolerance,” Magara said.

Stock Decline

Lonmin fell 4.4 percent to 259.3 pence at 1:16 p.m. in London, the lowest intraday level since July 3.

A group of men moved through the living areas around Lonmin’s mines last night singing insults to companies and non-striking workers, Sydwell Dokolwana, a regional secretary for the National Union of Mineworkers, said by today by phone. The group dispersed when police arrived, he said.

Producers of the metal, used in catalytic converters to reduce harmful emissions from automobiles, have lost 17.7 billion rand in revenue and employees 7.9 billion rand in wages due to the strike, according to a website run by the companies.

Platinum output in the country, which annually accounts for more than two-thirds of the world’s mined metal supply, dropped 44 percent in March, Pretoria-based Statistics South Africa said in a report today. The drop is the largest since February 2012, when production was cut because of a violent strike by rock-drill operators at Impala’s Rustenburg mines.

Demand Commitment

AMCU President Joseph Mathunjwa said the union has “nothing to do” with those who aren’t part of the union and that its members are committed to the wage demands.

“What Ben Magara is doing is not surprising,” Mathunjwa said by phone, referring to the producer going directly to employees with the offer. In “the massacre in 2012, the company went past the union and straight to the workers,” he said.

About 3,000 rock drillers went on strike at Lonmin in August 2012, demanding monthly pay be doubled to 12,500 rand. They agreed to return after winning increases of as much as 22 percent. The strike coincided with the AMCU recruiting members in a challenge to the then-dominant NUM. Magara became Lonmin CEO in July 2013, 11 months after 34 protesters protesting conditions and pay were killed by police in a single day near the company’s Marikana operations.

Far Apart

The AMCU has surged in membership since the killings and is now the main labor representative in South Africa’s platinum industry.

“A deal with AMCU at this point in time seems completely out of the question,” Anglo American Platinum CEO Chris Griffith said in an interview on Johannesburg-based Talk Radio 702 today. “It does seem that we’re so far apart and have remained far apart since the beginning.”

The AMCU has its biggest majority at Lonmin, where 82 percent of the workforce are members, according to the producers’ joint website. The union speaks for 62 percent of Amplats employees and 61 percent of Impala’s miners.

The platinum companies may struggle to provide workers who want to report for duty with adequate security, said Crispen Chinguno, a doctoral research fellow and specialist in labor relations at Johannesburg’s University of the Witwatersrand SWOP Institute. “Many of the workers live outside employers’ hostels in informal structures, which makes it difficult for either the state or the companies to provide security.”

More Police

Platinum-belt policing will be stepped up tomorrow for the planned return to work, Police Minister Nathi Mthethwa was cited by the South African Press Association as saying. “There will be increased patrols along the routes that workers use to get to the mines and police vehicles will escort buses carrying workers,” Mthethwa said.

At least 20 assaults were reported in the last two days, with “serious incidents of intimidation against employees and bus operators providing transport,” the three companies said in a separate statement yesterday.

UASA, another minority union at Lonmin, will encourage its members to report for duty tomorrow, Franz Stehring, the organization’s head of mining, said by phone. The union was satisfied with Lonmin’s arrangements to create a safe passage to work, he said.

Striking employees who return to work at Lonmin will immediately earn 9,085 rand in basic monthly pay and other cash benefits, as well as getting medical-insurance and retirement-fund contributions totaling 1,512 rand, according to the producers’ website.

Uphold Rights

“The right to strike is as important as the right to work,” the Chamber of Mines, which represents gold, coal and platinum producers, said in an e-mailed statement today. “We implore all workers to uphold this right and respect the lives of their fellow workers.”

The strikes could go on for at least another month, Mark Rosenberg, an Africa analyst at New York-based Eurasia Group, said in an e-mail. “Eventually the state will have to intervene and together the producers and the state have a lot more power than AMCU. There will be more casualties along the way.”

To contact the reporters on this story: Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net; Andre Janse van Vuuren in Johannesburg at ajansevanvuu@bloomberg.net

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

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