Lonmin CEO to Weigh Legal Options to End Platinum Strike

Lonmin Plc will examine “all legal options” to break a 17-week strike that’s cut annual platinum output by the world’s third-biggest producer of the metal by at least a third, Chief Executive Officer Ben Magara said.

“The situation is becoming sufficiently desperate,” Magara told reporters in Johannesburg yesterday. “We will do what it takes to make it possible for all those employees wishing to do so to return to work safely and will examine all our legal options in this regard.”

More than 70,000 members of the Association of Mineworkers and Construction Union have been on strike at Lonmin, Anglo American Platinum Ltd. and Impala Platinum Holdings Ltd., the world’s three largest producers, since Jan. 23. The striking miners, who are not paid during the protest, are demanding wages be more than doubled for entry-level workers by 2017. Stoppages that are protected by South African law, as the AMCU’s is, mean that miners taking part can’t be fired.

South African police are hunting the killers of four people who were murdered earlier this month in the nation’s platinum belt. One Lonmin worker was stabbed, a contractor was burnt to death and another man and woman were found with open wounds on their necks.

“First prize is to settle with AMCU, second prize is with the legal options,” Magara said. “We think this strike has become quite dysfunctional, it’s no longer serving its purpose.”

Strike Cost

The stoppage has cost Lonmin, Anglo American Platinum and Impala more than 18 billion rand ($1.7 billion) in lost revenue and workers 8.3 billion rand in wages.

“We’re not questioning whether the strike is protected or not, but we’re asking questions around whether this strike is dysfunctional,” Abey Kgotle, executive vice president for human resources, said at the briefing.

A change to the nation’s Labour Relations Act, which would have enabled producers to ask a court to declare the strike unlawful and compel workers to return or face dismissal, was removed by a parliamentary committee in February, Business Day reported. Without the provision, it will be difficult to enable this, the Johannesburg-based newspaper said on May 16, citing University of Cape Town law professor Halton Cheadle.

The AMCU has asked South Africa’s labor court to prevent employers from communicating directly with workers through text messages about the wage offer after the union rejected their last proposal earlier this month, the producers said in a joint statement on May 14. The matter will be heard today.

No Contravention

Lonmin’s decision to interact with its employees directly is “in no way a contravention” of the country’s labor laws, Magara said.

The AMCU wants basic monthly pay, without benefits, to be more than doubled for entry-level underground employees to 12,500 rand by 2017. The union’s demand would equate to a 30 percent increase in the first year of the agreement, which the companies say is unaffordable. They’re offering raises of as much as 10 percent annually.

Lonmin is exploring various options to have 26 percent of its equity owned by black citizens by the end of the year from 18 percent, which is required by South African law. The nation’s so-called empowerment legislation is in place to help boost the participation of black nationals in the fruits of the economy.

“We’re talking numbers around 3 to 4 percent” for employees, he said. “We’re happy to engage that to ensure it’s more than just basic.”

Hit List

The names of three of the people who were murdered earlier this month appeared on a “hit list” that detailed miners who agreed to return to work, City Press newspaper reported on May 18, citing part of the record it had seen. Such a list couldn’t have come from Lonmin, spokeswoman Lerato Molebatsi said yesterday.

Minority unions and companies operating in the Rustenburg area in South Africa, which has the world’s biggest platinum reserves, have reported violence and intimidation throughout the strike.

The situation at Lonmin’s mines yesterday was calm, Nkhoma said.

The company fired 235 essential-services workers who haven’t reported for duty since Jan. 23, the South African Press Association reported, citing Nkhoma. Under a recognition pact signed with the AMCU, employees involved in these services aren’t allowed to strike, SAPA said.

CEO Apology

Anglo Platinum CEO Chris Griffith on May 16 apologized for comments he made to Johannesburg-based newspaper Business Day relating to his pay and a bonus plan in which 12 managers and directors at the no. 1 producer stand to earn as much as 25.3 million rand in the next three years if they meet targets.

“Must I run this company and deal with all this nonsense for nothing,” Griffith said, according to Business Day’s May 14 edition. “I’m at work. I am not on strike. I am not demanding to be paid what I am not worth.”

In his May 16 letter, Griffith said his choice of words was “inappropriate and a poor way to describe the extremely challenging situation we find ourselves in. Further, the seemingly insensitive timing of bonus-scheme announcements has been determined by JSE reporting regulations coinciding with the prolonged strike.”

Anglo Platinum is seeing an increasing number of employees returning to work, Mpumi Sithole, a spokeswoman for the company, said by e-mail, without disclosing attendance figures.

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