Lonmin Agrees 'Peace Accord' With Miners

South African President Jacob Zuma along with others near the area where 34 Marikana miners were killed by police. Zuma is coming under pressure from the ANC., a photo by Pan-African News Wire File Photos on Flickr.

September 6, 2012 11:28 am

Lonmin agrees ‘peace accord’ with miners

By Helen Thomas in London and Andrew England in Johannesburg
Financial Times

Lonmin, the embattled platinum miner, has agreed a “peace accord” with striking miners at its Marikana operations in South Africa, as the London-listed company tries to draw a line under the violent protests which killed 44 people and brought production in the country to a standstill.

However, the Association of Mineworkers and Construction Union, which many believe sparked the initial illegal strike by 3,000 rock drill operators, refused to sign the accord, raising questions about whether the agreement will succeed in resolving the situation at Marikana.

Lonmin and its unions said they would invite the Amcu, which has grown rapidly in South Africa’s platinum sector often by courting frustrated members from the well-established National Union of Mineworkers, to join negotiations about amending the existing wage agreement.

Joseph Mathunjwa, president of Amcu, told the Financial Times that the union would provide details on its position on Friday.

A spokesman for the NUM said it was too early to say if all the miners would go back to work and added that the accord was intended to create an environment where those miners who want to return can do so without facing violence or intimidation.

“We are saying let them give freedom for everybody, those who want to go to work, let them go back to work,” said the spokesman. “Those who want to stay away, let them stay away on a voluntary process so there should be no coercion.”

In the past week, less than 5 per cent of Lonmin’s employees have been turning up for duty amid allegations of intimidation against workers, but Lonmin is hopeful that workers will return on Monday. The four-week strike has cost the company 2,500 platinum ounces in lost production per day.

Lonmin, which had been seeking an agreement to get its miners back to work before entering into wage talks, said it remained “hopeful” that other parties would sign the accord. “We simply ask that those negotiations happen in an environment free of intimidation and violence,” said Simon Scott, acting chief executive.

Shares in Lonmin, which have fallen 23 per cent in the past month, on Thursday morning rose nearly 6 per cent to 561p on hopes for the breakthrough.

Fighting between groups of wildcat strikers and other workers initially resulted in the deaths of 10 people, including two policemen in mid-August. But events took a further tragic turn last month when police fired into crowds of protesting miners last month, killing 34, in the worst episode of its kind since the apartheid era.

Strikers at the Lonmin mine have been demanding about a doubling of their monthly wages to R12,500. The situation, stoked by Julius Malema, the firebrand former youth leader of the ruling African National Congress, has raised concerns that the Marikana strikes could spark similar protests elsewhere in South Africa’s mining sector.

But on Wednesday a week-long wildcat strike involving about 12,000 workers at a mine operated by South Africa’s Gold Fields ended, the company said, while another recent disruption at an Anglo American platinum mine has also been resolved.

Rob Davies, minister of trade and industry of South Africa, said at a London conference on Wednesday that the government was focused on ensuring that the tragic events at Marikana were not repeated, arguing that the “trend line” of increasing foreign investment in South Africa had “not been disrupted”.

For Lonmin, which was already struggling amid a sharp fall in the price of platinum this year, the peace agreement could enable the company to start to think about righting its finances.

The miner last month said it was set to breach its loan covenants at the next test and could need to raise fresh capital. Analysts have predicted that the company could seek to raise anywhere from $400m to $1bn through a rights issue.