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Lonmin CEO Goes Head to Head With Union Boss as Hundreds Rally

April 3 (Bloomberg) -- The leaders of Lonmin Plc and its main union debated head to head in front of hundreds of miners at a Johannesburg rally today, the first such display since the start of a strike 11 weeks ago that’s crippled platinum output.

“We are not willing to negotiate on 9 percent; let us warn you and stop you right here,” Association of Mineworkers and Construction Union President Joseph Mathunjwa said on a stage to Lonmin Chief Executive Officer Ben Magara before hundreds of supporters who arrived by bus to deliver a memorandum at Lonmin’s Johannesburg offices.

“Your demand is unaffordable,” Magara said, followed by boos from the crowd. “When it suits you, come and talk.”

The stoppage by more than 70,000 employees since Jan. 23 at most platinum mines in South Africa has cost Lonmin, Anglo American Platinum Ltd. and Impala Platinum Holdings Ltd., the world’s three biggest producers of the metal, 11.3 billion rand ($1.1 billion) of revenue while employees have forfeited 5 billion rand in wages, according to a website set up by the three companies.

The AMCU wants the producers to more than double wages within three years, while the operators have offered increases of as much as 9 percent, compared with South Africa’s inflation rate of 5.9 percent in February.

Most employees want to return to work, Magara said. Lonmin’s assessment of worker sentiment is based on text and voice-mail communications the world’s third-biggest platinum producer has received from most of the 20,000 employees it was in touch with, he said. About 23,000 Lonmin miners are on strike.

Offer Fair

Most of those Lonmin has had contact with indicated that the offer was fair, Charmane Russell, a spokeswoman for the producers at Russell & Associates, said today.

“The realities are they are telling us they’re being intimidated,” Magara said. “Is it AMCU, is it not? We don’t know.”

Mathunjwa accused the company of approaching union members with wage deals instead of going through its leadership. “Please don’t seek division of our members,” he said, addressing Magara. “The consequences will be dire.”

The industry isn’t spending about 67 million rand on goods and services daily, Magara said.

The three producers have sent force majeure notices to some of their suppliers at operations affected by the strike. Such letters state that circumstances prevent a company from fulfilling contracts.

Last Resort

Lonmin won’t send similar notices to customers and will buy metal on the open market for supplies “as a last resort,” Magara said.

Lonmin hasn’t experienced serious decay to underground mining areas because of the strike, Executive Vice President for Mining Mark Munroe said.

The only impediment to ramping up operations once the strike ends will be people’s health, nourishment and their mindsets, he said.

Lonmin and the other producers will be open to negotiate with the AMCU on the existing offer, Magara said.

“We don’t want to act like we’re stiff and insisting that this is where we are and we’re not moving until we buckle,” he said. “This is not a win-lose situation, we need to find common ground together, but it’s got to be affordable.”

The company has no need to look for finance because of the revenue losses, Magara said. Lonmin had cash holdings of about $200 million at the end of September.

“We’re in a very competitive position about how long we can hold on,” he said.

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

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

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