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Lonmin (LSE:LMI), the world’s third largest miner of platinum announced yesterday that is had “presented an offer to the employee delegate” of the miners who have been on strike for just over a month now. The workers have been waiting for feedback before continuing negotiations.
The strike action last month had employees so enraged that some factions became unruly to the point of attacking police who had come to the scene to keep the peace. As tensions rose, shots were fired and, before long, a total of 45 workers died, never to see a paycheck of any kind again.
Well, the offer has been presented today, and it has been rejected by the workers and their unions. Despite any other alleged reasons for the strike, it has become increasingly more obvious that it’s all about the money. The current rate of pay for the striking miners is 4,000 South African Rand per month, the equivalent of £297. The miners are asking for their wage to be tripled to 12,500 (£930) per month. Lonmin’s offer was an increase of 986 rand per month (£73.36)
The responses from the miners seem to depend upon what time the reports were published. One report said that the workers considered the offer an insult. Molisi Phele, a union rep, said “We are going back to tell them the workers say ‘Thank you for giving us nothing. They said ‘No Go’ and ‘Tell those guys to put 12.5 on the table. If they are unable to do that, thank you, let Lonmin take their bags and go back to London.’ However, as might be expected, another spokesperson, Mamtiwe Sebei, from the Democratic Socialist Movement Party, said that “By the evening of Sunday all the mining industry in Rustenburg will on its knees.” Something more that wage seemed to be his mission, as he went on to say, “Only ourselves and no one else can liberate our country. We’re starting with a mining strike here in Rustenburg, but we’re next week going to march to the Union Buildings.”
This is beginning to sound more like a political uprising than a labor strike. In fact the work stoppage has extended to other mining sites and companies. Nearly 28,000 Lonmin workers are out on strike. Another 15,000 are on strike at the KDC West gold mine. It appears that 26,000 Amplats workers might be ready to follow.
Rustenburg, the fastest growing city in all of Africa, is the center for platinum mining. Ninety-four per cent of South African platinum is mined there. The mining jobs around Rustenburg comprise 35% of all industrial jobs in the country. South African president Jacob Zuma said that continuing strikes and work stoppage will “make them and the country worse off. Our economy must grow . . . to improve the standards of living.”
Lonmin has warned that continuing the strike could leave 40,000 people unemployed. Amplat (LSE:AAL) has warned against strikes at their facilities as well. It shut down five mines employing 24,000 people whose lives had been threatened by those on strike. Bishop Jo Seoka, who is trying to move mediation talks towards a resolution, said that “I think they (Lonmin) are very desperate. I think they want to resolve the matter, because it impacts on the platinum industry as a whole.” Amplat’s finance director said, “It’s an industry-wide issue, and there’s contagion.”
The South African mining industry employs over half a million people and generates one-fifth of the entire GDP for the country. The country’s justice minister has threatened to use more force, if necessary, to get the miners back to work, as he attempts to contain this wage controversy before it evolves into wider civil unrest.
In the meantime platinum prices are being adversely affected in commodity trading. However, a shortage of supply could lead to higher prices in the near future. Lower production could have deleterious effects of the electronics industry where the thirst for platinum is endless.
