speaking of platinum mine closures
online.wsj.com
Lethal Clashes Shut Platinum Mine
By DEVON MAYLIEJOHANNESBURG—The world's third-largest platinum producer on Tuesday suspended most production at its South African mine, its lone source of the metal, following clashes between rival unions that left 10 people dead.
Lonmin LMI.LN -1.06% PLC said the company was only able to produce metal from previously mined material, with very little fresh mining taking place at its 12 shafts. Too few workers have shown up for shifts amid concerns for their safety, the company said. Police said they found a 10th body Tuesday but there aren't details on the cause of death.
Associated PressStriking South African workers sit near their closed platinum mine Tuesday. Clashes have claimed 10 lives.
The sharply curtailed output threatened year-end targets and crimped supplies of a metal used primarily in automobiles and jewelry.
Lonmin said it plans to issue an ultimatum to striking workers to return to work or face dismissal. It didn't provide details. "Our priority is to work with the police and arrest the delinquents," said Barnard Mokwena, Lonmin's executive vice president for human capital and external affairs.
A strike Friday by 3,000 rock drillers over a demand for higher wages escalated into fighting between employees as two unions said members were attacking each other. Two police officers and seven employees have been killed since the fighting started over the weekend. The 10th body hasn't been identified yet, the company said.
By Tuesday, barbed wire surrounded some parts of the mine while helicopters patrolled from the sky, buzzing above armored police cars situated around the mine.
Violence has spun out of a rivalry between the emerging Association of Mineworkers and Construction Union and the country's largest mine union, National Union of Mineworkers, who are competing for majority union membership in the country's platinum mines. AMCU has said it is recruiting in the platinum-producing region because of the industry's low wages. It plans to expand across the country and is already recruiting in iron-ore and coal-producing areas.
NUM general secretary Frans Baleni said his union members are pointing fingers at AMCU members for sparking the violence but said the perpetrators are "clandestine" so it hasn't been confirmed. AMCU Monday lashed out at NUM and mine management, accusing them of trying to "sideline AMCU as a violent union." AMCU blamed NUM for shooting at its members, a claim NUM denies.
"AMCU has nothing to do with the killings," AMCU President Joseph Mathunjwa told reporters Tuesday. "Employers need to accept the fact that there are real challenges of salary discrepancies which requires honest attention."
For South Africa's mining sector, already struggling to attract investment, the increasingly violent clashes among miners are the latest cause for concern. A nationalization debate in the country has called into question future ownership of the biggest mines. Meanwhile, a shortage of electricity in the country has put mining supplies at risk. Mining companies also complain that labor costs are going up more than the rate of the country's inflation.
"There is a whole list of things to put investors off," said Neil Gregson, the head of J.P. Morgan Asset Management's natural-resources fund.
The deaths this week at Lonmin resulted from just one of several interunion fights. In February, a six-week strike at Impala Platinum Holdings Ltd's IMP.JO -0.15% biggest mine led to the loss of 120,000 ounces of platinum and about two billion rand ($245 million) in revenue. Earlier this month, an armed attack left three people dead at Aquarius Platinum PLC. AQP.LN -2.46%
Since the end of apartheid, NUM membership has shifted toward higher-paid, skilled jobs, while the AMCU increasingly represents lower-paid workers, such as rock-drill operators, said Duncan Money, an analyst at risk consultancy Maplecroft. That shift has enabled AMCU to gain traction. As it began to erode the membership of NUM, clashes turned violent.
The country's Department of Mineral Resources said the union battles are adding challenges to its efforts in convincing investors that the country is a good place to invest, an image already dented by cost increases for electricity and a nationalization debate that has made companies nervous about ownership.
In the past two years, the mine department embarked on a global roadshow to attract investors. The country's rank had been dropping in a closely watched survey of mining companies conducted by the Fraser Institute, a Canadian think tank. But South Africa did rise in its ranking for investment attractiveness in the 2011-2012 survey, to 54 out of 93 mining regions, which includes countries and individual provinces and states, compared with 67 out of 79 the year before.
Write to Devon Maylie at devon.maylie@dowjones.com
A version of this article appeared August 15, 2012, on page B3 in the U.S. edition of The Wall Street Journal, with the headline: Lethal Clashes Shut Platinum Mine. |
