Johannesburg - The world's number three platinum producer Lonmin has been forced to freeze mining at its South African operations after violence between rival unions killed at least nine people.
Lonmin, already struggling with low prices and weak demand, may miss its annual production target of 750 000 ounces as the quarter to the end of September is typically its best. Its share price fell more than four percent in London and Johannesburg.
The London-based company accounts for 12 percent of global platinum output and the shutdown drove the spot price of the precious metal as much as two percent higher.
Two policemen and two security guards were among those killed in the clashes from Friday to Monday at the Marikana mine, about 100km north-west of Johannesburg.
It was the deadliest violence yet in a membership turf war between the dominant National Union of Mineworkers (NUM) and the newer Association of Mineworkers and Construction Union (AMCU) in South Africa, home to 80 percent of known platinum reserves.
Executives at Lonmin said mining had stopped at all its shafts across the South African platinum belt, though essential services such as ventilation were continuing. The fact that the shafts remain operational should allow mining to restart as soon as miners return to work.
“Until the place is safe we don't want to talk about production,” Lonmin Executive Vice-President Barnard Mokwena told a press briefing at Marikana.
The company said its ore processing division remained operational, but stockpiles were low.
The latest violence began on Friday during an illegal strike held by 3 000 rock drill operators at Lonmin's Western Platinum mine. AMCU and NUM members clashed, and police and security guards trying to restore order were caught up in the violence.
“Management, they are in support of NUM, they're sleeping in one bed with NUM,” AMCU President Joseph Mathunjwa told a news briefing. AMCU officials deny their members are behind the unrest, but a pattern of illegal strikes followed by violence is emerging in the wake of their recruiting efforts.
Lonmin said it would issue the employees who initiated the stay away with an ultimatum on Wednesday. This could lead to the dismissal of at least 3 000 mineworkers should they not return to work.
At least three people were killed in a similar round of labour violence in January that led to a six-week closure of the world's largest platinum mine, run by Impala Platinum. That helped push the platinum price up 15 percent.
“The price rise in February was probably partly due to the Impala disruption, and you could easily see a price rise if the current disruption is sustained,” said David Jollie, an analyst at Mitsui Precious Metals.
The AMCU-NUM rivalry, which had already caused friction at Lonmin's Karee mine, has now spread to other shafts at a time when the company is cutting back on investment plans in the face of weak demand and shrinking margins.
Scores of police officers, including units mounted on horseback backed by armoured vehicles, descended on the Marikana facility on Tuesday to prevent any repeat of the violence.
Police helicopters clattered overhead as officers set up checkpoints and laid down barbed wire. In a nearby township, a group of men, apparently mine workers, gathered carrying sticks and bars.
Mines Minister Susan Shabangu, speaking to reporters near Johannesburg, said she was prepared to intervene to try to solve the Marikana dispute but did not say how.
“It's quite clear it's rivalry between the two unions. If this matter continues we are going to be involved in the process of making sure we find peace,” she said.
Some miners have complained that the NUM, a buttress of electoral support for South Africa's ruling African National Congress, does not defend the interests of its rank and file.
Aggressive smaller unions have been poaching NUM members and Lonmin executives said 21 percent of the company's 28 000-strong South African workforce were now AMCU members. - Reuters