South African mining unrest spreads

August 22, 2012

Labor unrest engulfing the South African platinum industry spread Wednesday, prompting fears of a broader mining crisis in one of the main commodity-producing countries.

Platinum and gold prices continued to soar as investors braced for supply disruptions after 44 people died during several days of strikes at a pit owned by London-listed Lonmin.

Anglo American Platinum, the industry leader with about 45 percent of global supply, said Wednesday that a group of workers had bypassed their own unions and made a broad range of demands, including on pay, at the end of last week. Miners at Royal Bafonkeng Platinum, a black-owned, mid-tier company, also demanded pay increases and blocked colleagues from going to work.

The unrest has started to affect global commodities markets, with platinum — used in catalytic converters on cars — surging to $1,524 a troy ounce, up 10 percent since the killing of the workers. Gold prices rose to a three-month peak of $1,644.80 an ounce. South Africa is the world’s largest platinum producer and fifth-largest gold producer.

The growing crisis prompted Jacob Zuma, South Africa’s president, to make a high-profile visit to the stricken Lonmin mine on Wednesday. He addressed workers near the area where police opened fire last week, killing 34 mine workers, saying: “We cry with you, all of us. . . . It is not acceptable for people to die where talks can be held.”

But Zuma’s intervention, nearly a week after the worst bloodbath in the country since the end of apartheid in 1994, did little to calm the protest.

Representatives of the miners told the president they would not return to work until their wage demands were met. There are also complaints against the police.

Zuma said Wednesday that he would name members of a commission to lead an inquiry into the massacre.

The violence at Marikana, which culminated in last week’s police shooting, started nearly two weeks ago when a group of rock drill operators demanded substantial wage increases, up to about $1,500 per month.

The unrest is damaging the image of South Africa’s mining industry, which accounts for nearly a fifth of its gross domestic product. The industry has already had a public debate over nationalizing the mines.

“The situation in South Africa is concerning,” Ivan Glasenberg, the South African chief executive of commodities trader Glencore, said this week.

Marius Kloppers, the South African-born chief executive of BHP Billiton, the world’s largest mining company, said that “as a mining jurisdiction, South Africa has over the last 10 years attracted less investment on balance than its resource base would dictate,” an indication that investors are cautious about spending money.

BHP has no presence in gold and platinum, sectors that make up a substantial chunk of South Africa’s mining industry, but does have manganese, thermal coal and aluminum operations in the country.

Mark Cutifani, the head of the country’s chamber of mines, said that despite the unrest, roughly 95 percent of the South African industry was operating normally.

Executives are now watching to see whether the protests spread from the platinum sector, which is notoriously labor-intensive and dangerous, to other areas, including gold, ferrochrome and coal.

— Financial Times

England reported from Marikana, South Africa. Javier Blas also contributed to the report.

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