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Lonmin Strike Is Over, South African Labor Mediator Says

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Sept. 18 (Bloomberg) -- Lonmin Plc workers who led a strike at the third-largest platinum producer agreed to accept a revised pay offer and will return to work Sept. 20, ending an almost six-week stoppage.

“The Commission for Conciliation, Mediation and Arbitration can confirm that the strike at Lonmin’s Marikana mine has ended,” the Johannesburg-based labor mediator said in an e-mailed statement today. Worker representatives “have accepted Lonmin management’s latest offer and will return to work.” Unions and worker groups signed the deal in Mooinooi, northwest of Johannesburg, Afzul Soobedaar, senior commissioner at the CCMA told reporters.

Workers will get an “overall 22 percent” increase and a one-time payment of 2,000 rand ($245) for resuming their shifts, Bishop Jo Seoka of the South African Council of Churches, a talks mediator, said at the Marikana mine in Rustenburg, north west of Johannesburg.

Pay grievances triggered a violent strike last month and halted Marikana, which accounts for about 96 percent of Lonmin’s output. Platinum has jumped 15 percent since the strike started Aug. 10. The unrest has left at least 45 people dead, including 34 protesters shot by police on Aug. 16.

The CCMA’s statement didn’t state pay increase numbers.

A copy of Lonmin’s final offer, distributed to workers, shows rockdrill operators’ pay, including housing and medical allowances, will increase to 11,078 rand from 9,063 rand a month. Entry-level or “general” workers’ pay would increase by 18 percent to 9,611 rand while winch and locomotive operators’ pay would be boosted by 11 percent to 9,883 rand. Production team leader salaries would increase by 10 percent to 13,022 rand.

Deadly Protests

“The workers are very happy with this,” Seoka said. South Africa’s inflation rate was 4.9 percent in July, according to the country’s statistics agency.

Frans Baleni, general secretary of the National Union of Mineworkers, the largest labor union, didn’t answer calls to his mobile phone for comment on the CCMA statement.

Platinum fell as much as 2.6 percent to $1,676.25 an ounce as news of the wage agreement came and traded at 1,627.25 an ounce as of 8:38 p.m. in London. South Africa’s rand strengthened as much as 1.3 percent against the dollar to 8.1617.

Lonmin cut its fiscal 2012 sales target yesterday by as much as 8.7 percent to 685,000 ounces and said it will idle its K4 shaft. Debt conditions may be breached, Lonmin said last month. Funding options haven’t been finalized, Acting Chief Executive Officer Simon Scott said in an interview today.

Wages account for about 60 percent of the company’s “overall cost basket,” he said.

Lost Production

Aquarius Platinum Ltd. and Anglo American Platinum Ltd. have reopened mines that were idled last week as a precaution amid intimidation of workers.

The strikes have cost the economy 4.5 billion rand in lost production, South African President Jacob Zuma said yesterday at a conference in Johannesburg. Zuma said today in Brussels he was “very happy” that the Lonmin dispute appeared to have been resolved.

“The longer-term damage to South African mining may be far greater as international investors shy away from investment in local mines,” London-based investment services company Fairfax I.S. Plc said in a note. “Ethical and socially responsible mandated funds will struggle to buy into miners where mineworker violence is an issue.”

Anglo American Platinum, the largest producer of the metal, suspended operations with output of 2,100 ounces daily on Sept. 12 as some workers were intimidated and others started a pay strike. The company urged all employees to return to work by no later than tomorrow, it said in a statement.

“Beyond this date, the company will have to initiate appropriate employee relations procedures for those employees who choose not to return to work,” it said.

At the Rasimone Platinum mine in Rustenburg, a joint venture between Royal Bafokeng Platinum Ltd. and Anglo American Platinum, police arrested 42 people for public violence yesterday.

The mine was quiet today, spokeswoman Rea Kalebe said. It was “too early” to comment on attendance.

To contact the reporters on this story: Matthew Hill in Johannesburg at mhill58@bloomberg.net; Carli Cooke in Johannesburg at clourens@bloomberg.net

To contact the editors responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net; John Viljoen at jviljoen@bloomberg.net

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