Lonmin wage talks falter

Dineo Faku

THE cost of what is now a month-long strike at Lonmin escalated yesterday as miners continued to shun work, and talks aimed at breaking the stalemate were abandoned.

10/09/2012 Striking Lonmin mine workers march across the mine shafts in Marikana to ensure they were all not operating and that no workers had turned up for duty.Picture: Phill Magakoe. Credit: INLSA

About 5 000 armed protesters carrying an assortment of weapons marched at the mine, calling for the closure of all Lonmin’s operations.

Since the beginning of the wildcat strike on August 10, Lonmin has lost R5 billion in market capitalisation. The company warned last month that it might breach its bank covenants because of lost income during the protest, which was sparked by 3 000 rock drill operators who were demanding a salary of R12 500.

The pressure on Lonmin is increasing as it faces a review of its financial covenants at the end of the month.

The company has lost over R1bn in revenue from metal sales, and its 28 000 employees have lost millions in salaries.

“Based on normal production, Lonmin was losing $5m (R40.8m) a day since the strike started,” Peter Major of Cadiz Corporate Solutions said.

“Salaries and wages account for 50 percent of costs. The guys on strike are losing probably $1.5m a day, although most management isn’t on strike, so are probably getting paid their salaries. That money has to come from somewhere,” he said.

Another analyst, who spoke on condition of anonymity, said: “I think Lonmin has lost much more than R800m.

“They must rather close their operations until a resolution has been found to the labour unrest.”

Lonmin said yesterday that an average of 6.34 percent of its 28 000 workforce reported for work yesterday. However, talks brokered by the Commission for Conciliation, Mediation, and Arbitration (CCMA) to address wage demands failed. Not all workers had returned to work, and this was a pre-condition for pay talks to resume.

“The CCMA facilitation is dependent on a return to work by all workers in the Lonmin Marikana wage dispute,” the company said in a statement.

Vusi Mabena, head of transformation at the Chamber of Mines of South Africa, said the strike would have a negative effect on the company and its 28 000 employees as they would lose out on their salaries.

“Lonmin had said [it] will talk when employees returned to work, they [workers] need to recognise they are on an illegal strike and they need to go back to work,” he said.

The trouble at Lonmin spread on Sunday night to the west section of the Kloof and Driefontein Complex (KDC) where Gold Fields said 15 000 employees downed tools in an unprotected strike.

At Impala Platinum (Implats) a group of workers aligned to the Association of Mineworkers and Construction Union (Amcu) had demanded a 10 percent pay increase, the second-largest platinum producer said yesterday. “The Amcu-aligned interim workers’ committee demanded the 2012 wage agreement be brought forward again,” Implats spokesman Johan Theron said.

Earlier this year, Implats received a similar demand from the National Union of Mineworkers (NUM).

“At KDC East, we lost between 4 500 and 5 000 ounces at around $1 600 an ounce,” said Sven Lunsche, a spokesman for Gold Fields, referring to a strike at the eastern section of the mine last week.

NUM spokesman Lesiba Seshoka said the workers considered their tax deductions too high and were urging Gold Fields to stop deducting tax from bonuses; equalise wages across operations; and stop the funeral cover benefit deduction.

They also want the removal of NUM branch leadership because of the tax issue.

“Our leadership is there to hear the issues, I don’t know when the strike will be resolved. It depends on how they respond,” Seshoka added.

Meanwhile, Gold One revised its production guidance at its Modder East operation following a wildcat strike in June.

“Despite recent events at Modder East, the company advises that it expects to deliver 53 600 ounces for the September 2012 quarter compared to guidance of 55 000 gold ounces. In addition, the Cooke 4 shaft (previously known as Ezulwini) is forecast to produce an additional 6 000 ounces for August and September”.

Lonmin shares closed 2.3 percent higher at R80.60. – Additional reporting by Sapa.