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South African mining industry fears precedent after Lonmin strike settlement

By Andrew England,

MARIKANA, South Africa — Hundreds of South African mineworkers gathered Wednesday at a sports stadium that sits in the shadow of the hulking frames of a platinum mine, singing songs and discussing wages under the gaze of a group of police officers.

The security presence was a reminder of the violence that has plagued industrial action around the Lonmin mine in Marikana — most notably when police shot and killed 34 illegally striking miners.

But for the first time in weeks, the mood was calm rather than volatile as the workers celebrated the end of the nearly six-week strike that has damaged South Africa’s image and sent shock waves through its mining industry.

The miners and Lonmin, a London-listed company, reached an agreement Tuesday night after the company pledged to raise the salaries of several different categories of miners by 11 to 22 percent. The miners will also receive a one-off $242 bonus if they return to work Thursday.

The wage agreement, however, does not mean the beleaguered sector’s woes are over. The concern now is that the strike and Lonmin’s pay increases could set a dangerous precedent for mining at a time when the industry, particularly platinum, is struggling with rising costs and the effects of a grim global economic outlook.

Lonmin’s wage agreement incorporates 9 to 10 percent salary increases that workers were already due to receive in October, but it is the 22 percent increase offered to 4,000 rock drill operators that is the focus of attention.

“One hopes the contagion effects are as limited as possible. The difficulty is it may set a precedent,” a senior industry official said. “This is all happening in the middle of a major platinum crisis. You are sitting here, and you’ve got half of the industry loss-making. These sorts of pressures are just going to result in more shafts closed and more jobs being lost, so who is winning?”

Some platinum companies have already mothballed mines because of the economic climate, and this week Lonmin said it was shelving development at its K4 shaft and terminating a contract for 1,200 staff from next month.

Platinum and gold mining employ about 190,000 and 150,000 people respectively, and wages account for more than half the sectors’ production costs.

Others are worried that the ripple effects of the settlement could go beyond mining as the Marikana crisis exposed frustrations over poverty in one of the world’s most unequal societies, as well as fraught labor relations as more workers become dissatisfied with their traditional unions and the African National Congress-led government.

Union disputes and more militant demands are already complicating existing strikes and are likely to lead tougher wage negotiations in the future.

Even as the Lonmin miners celebrated Wednesday, police used tear gas and rubber bullets to disperse a group of men at a squatter camp near another platinum mine operated by Anglo American Platinum, the world’s top producer of the precious metal.

Amplats lifted a suspension on five of its mines in Rustenburg on Tuesday, but many of its miners had not returned by Wednesday, a problem blamed on some striking and others staying away because of intimidation. The company said that its staff should return to work by Wednesday evening or it would declare their strike illegal. Elsewhere, 15,000 workers at a mine operated by Gold Fields are in the 10th day of a strike.

Industry officials point out that miners are relatively well paid compared with many of their compatriots.

The rock drill operators who triggered the strike at Lonmin on Aug. 10 earned a basic salary of $655 a month, rising to around $1,188 a month with benefits.

“We will see the impact of this [the Marikana crisis and its fallout] and whether South Africa can sustain it, not this year, not next year, but in years to come,” said Thero Setiloane, chief executive of Business Leadership South Africa.

— Financial Times

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