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Lonmin Says AMCU Strike at Platinum Mine Would Be Illegal

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     June 6 (Bloomberg) -- Lonmin Plc said a potential strike in South Africa by its largest labor union would be illegal after the group threatened the action if the world’s third-biggest platinum producer fails to meet its demands.

“The court has said it would be illegal,” Mark Munroe, Lonmin’s executive vice president of mining, said in a conference call with reporters today. “We’d reserve our rights to take the appropriate action at the time.”

The Association of Mineworkers and Construction Union plans to ask Lonmin management for a meeting on June 10, AMCU Treasurer Jimmy Gama said. If no deal is reached, the union will serve Lonmin with a 48-hour notice of a strike and may stop work from June 15. Lonmin has received no ultimatum from the union, it said.

The AMCU has unseated the National Union of Mineworkers, an ally of the ruling African National Congress, as the biggest union in the platinum industry. The change isn’t formally recognized by Lonmin, which says it favors multi-union representation. A strike would mean a return of disruption to Lonmin’s 13-shaft Marikana mine, the site of deadly violence during protests last year, slowing plans to raise output and restore profitability.

“The strike is the preferred option,” Gama, who often acts a spokesman for the AMCU, said by phone. “It’s upon the company to realize that it doesn’t help them to try and protect the minority union at the workplace.”

Police Presence

While mine violence in South Africa hasn’t worsened to levels seen in August, when the 34 protesters shot by police in a single day were among at least 46 deaths at Marikana, recent tensions have resulted in the killing of two union officials -- from the AMCU and the NUM -- in May and June.

Lonmin has stepped up the visibility of security personnel and is asking for a “dramatic increase” in police around Marikana’s living quarters and union offices, Executive Vice President for Processing Natascha Viljoen said on the call.

“Over the past few weeks, we have seen a worryingly high level of violence and instability across the platinum belt,” and this is why there are fears of a further escalation and violence, Viljoen said. “The killings have happened in taverns, in homes and at union offices. The violence is affecting the lives and livelihoods of all the people who live and work in this area and we can’t just stand by and watch as our employees and community members are murdered.”

Wage Negotiations

A further strike at Lonmin, the third-biggest platinum company, would coincide with annual wage talks in the industry. Producers including Anglo American Platinum Ltd., the largest, have little room for maneuver after stagnating prices capped profit, dragging down share values and forcing spending cuts.

South Africa’s annual production of platinum-group metals may be pared by about 5 percent given the labor negotiations, or more in the event of mine shutdowns, Standard Bank Group Ltd. wrote in a June 3 research note.

Lonmin employs 27,000 staff and a further 10,000 contractors. The AMCU represents 70 percent of lower-skilled workers at the company.

The AMCU has said any Lonmin union retaining 35 percent membership among the workforce should gain organizational privileges. A 45 percent threshold should be met for wage bargaining rights and 50 percent plus one to negotiate on other issues on behalf of all workers, AMCU President Joseph Mathunjwa said May 31.

Lonmin agreed to the recognition thresholds proposed by AMCU for lower skilled workers, while keeping intact the existing 20 percent membership requirement for categories including officials and artisans, the company said in a statement today.

Conciliation Hearing

The platinum producer proposed that its terms be implemented July 1, “but effective 2015 to give all parties time to prepare for the change,” it said.

South Africa’s Commission for Conciliation, Mediation and Arbitration has scheduled a hearing on June 26 to make a final decision on union recognition at Lonmin. The NUM has until July 16 to regain its majority among the workforce or lose its office and associated rights, a Johannesburg labor court has ruled.

“The arbitration process would not be invalidated, that process would remain in place” if a strike occurred, Abey Kgotle, Lonmin’s head of personnel, said on the call.

Lonmin rose 2.9 percent to 288.20 pence by the close in London.

Disruption in the country’s mining industry isn’t limited to platinum operations. Workers at Glencore Xstrata Plc started an unauthorized strike on May 28 at the Helena chrome mine in Mpumalanga province after an employee, who is an AMCU member, accused a shift supervisor of assault. The company fired about 1,000 workers after the action spread to the Magareng and Thorncliffe mines. About 1,500 miners are employed at the sites.

The AMCU is requesting a meeting with Glencore Xstrata today, Gama said.

To contact the reporters on this story: Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net; Christopher Spillane in Johannesburg at cspillane3@bloomberg.net

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

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