Lonmin CEO surprised by strike length

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Copy of IOL bus apr3 Ben Magara c Supplied Lonmin CEO Ben Magara.

Johannesburg - Lonmin Plc’s chief executive officer is surprised by the length of South Africa’s platinum strike and by the unwillingness of the old acquaintance leading the walkout, Joseph Mathunjwa, to accept “economic realities.”

“I thought I knew him very well and I thought this would not go this far,” Ben Magara, 46, said in an interview with Boason Omofaye of Bloomberg TV Africa. “We know each other but I think I am dumbfounded about why the economic realities are not dawning” on Mathunjwa and members of his union.

Magara’s Lonmin, with fellow miners Anglo American Platinum Ltd. and Impala Platinum Holdings Plc, have been at loggerheads with Mathunjwa’s Association of Mineworkers and Construction Union since January 23 when the labour group went on strike over pay. AMCU has rejected the companies’ latest offer of R12 500 rand a month by 2017, including benefits, instead demanding that amount in base pay within four years. That’s double entry-level workers’ current salaries.

“We are close enough to realize that Lonmin belongs to both me and him, his members and my employees and my investors,” said Magara, who has known Mathunjwa since 1999 when he was working at Anglo American Plc’s coal division and the union leader began his labor group at BHP Billiton Plc.

The pair put on a show of unity in August, shaking hands when Lonmin announced that the AMCU had become the majority labor group at the company.

MARIKANA KILLINGS

Magara, from Zimbabwe, became Lonmin CEO in July 2013, 11 months after 34 protesters were killed by police in a single day near the company’s Marikana operations. Mathunjwa’s AMCU has surged in membership since those events and is now the dominant union in South Africa’s platinum industry.

“The only solution in this thing is for companies to come to the table and talk about how we can reach 12,500 in four years,” Mathunjwa said today in a phone interview. “There is no other way.”

The strike, the longest mining labor stoppage in South Africa’s history, has cost companies almost R16 billion in lost revenue and workers R7.1 billion in income, according to the producers.

“We are doing everything to safeguard the business,” Magara said. “Cash burn, reduce it, everything else not critical, reduce it.”

Lonmin has declined 11 percent to 286.7 pence since the strike began Jan. 23 in London trading. Platinum is down 2.3 percent to $1,424.5 an ounce in the period.

Bloomberg



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