May 14 (Bloomberg) -- Lonmin Plc, the world’s third-largest platinum producer, said operations at its Marikana mine in South Africa have been halted after workers refused to go underground following a union official’s death.
Mining is suspended because of “an illegal work stoppage,” Sue Vey, a company spokeswoman, said in a text message. None of the 13 shafts at Marikana are operating, she said. Lonmin fell 7.3 percent to 265.10 pence by the close in London, the most since April 15.
The latest unrest at the mine near Rustenburg, 120 kilometers (75 miles) northwest of Johannesburg, comes after the Association of Mineworkers and Construction Union said a local organizer was shot dead on May 11. Competition over membership between the National Union of Mineworkers and AMCU is intensifying before annual wage talks.
“Management is in discussions with our recognized trade unions to ascertain the reasons for the stoppage and to encourage workers to return to work,” Lonmin said in a statement. The company employs 27,000 people and 10,000 contractors, according to Vey.
AMCU members “are demanding that the National Union of Mineworkers’ offices be shut because one of their own has died,” Lesiba Seshoka, a spokesman for the NUM, said in a phone interview. Miners at Marikana also refused to go underground in March, demanding the NUM close its office.
Violence at the mine in August that erupted from a dispute over pay left 44 people dead -- including 34 shot dead by police on a single day, 70 injured and led to about 250 arrests. President Jacob Zuma appointed a commission of inquiry to investigate events at the mine.
The rand declined as much as 0.8 percent to 9.2319 per dollar today after the news of the work stoppage, its lowest level since April 22. It traded at 9.2091 as of 5:35 p.m. in Johannesburg. Finance Minister Pravin Gordhan called for a resolution to disputes at Lonmin. “Returning to normal production in our mining industry is absolutely critical,” he told reporters in Cape Town.
Lonmin and AMCU will hold talks, the union said. “Management is going to have a meeting with the branch,” Jimmy Gama, treasurer for the AMCU, said by phone.
A prolonged disruption could pose a threat to Lonmin’s forecasts of increased output. The company said yesterday it plans to exceed production of 700,000 ounces of platinum metals in concentrate this year after the 2012 strikes cut volumes and raised costs.
About 2,000 ounces a day of platinum production could be lost if a strike is under way and operations are disrupted, Edward Sterck, an analyst with the Bank of Montreal, said in a note to clients. “However, Lonmin has been performing well recently and has built a reasonable stockpile of metal in concentrate” and the disruption of a short strike could be small, he said.
Mawethu Khululekile Stevens, 46, a local organizer for AMCU, was shot dead May 11 at a tavern near the mine in the North West province’s Rustenburg region, the union said.
“Stevens was meant to appear before the Marikana Inquiry as he was involved in the mining protests that took place ahead of the Marikana tragedy last year,” Jeff Mphahlele, AMCU general secretary, said yesterday.
Lonmin has been negotiating with AMCU over a labor recognition agreement since growth in its membership made it the majority union at the company.
The union wants a threshold for recognition of 30 percent, while Lonmin is seeking a level of 10 percent, according to AMCU. The union has referred recognition talks with Lonmin to South Africa’s Commission for Conciliation, Mediation and Arbitration.
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