The time is nigh for Lonmin

2012-09-08 12:35

Union refuses to sign peace accord as mine loses millions

Lonmin would soon be faced with difficult decisions about its future should employees not heed its call to return to work, a situation deemed unlikely even by those parties committed to last week’s peace accord.

The platinum producer said on Friday it was expecting its workforce to return to work tomorrow.

Attendance across the group’s operations in North West has continuously edged lower since the massacre at Marikana on August 16, in which 34 miners were killed, bringing the number of dead to 44 in violent attacks since some 3 000 rock-drill operators embarked on an illegal strike over wages the week before.

The group reported a 2% average attendance on Friday.

Lonmin and three recognised trade unions – the National Union of Mineworkers (NUM), Solidarity and Uasa – on Wednesday signed a peace agreement whereby the unions have committed to return to work tomorrow in return for a new round of negotiations with the company over wages.

Those who have not signed the agreement were the Association of Mining and Construction Union (Amcu), the favoured union of a majority of the striking rock-drill operators, as well as independent worker committees.

Amcu president Joseph Mathunjwa said on Friday the resolution of the strike depended on an agreement by Lonmin’s management for a R12 500 basic salary.

“On the 16th of August (before the massacre) workers mandated us to go and ask Lonmin to commit to the process on how to reach their demand of R12 500. No other mandate was given to us by workers since then.”

Mathunjwa said Amcu didn’t sign the peace accord because the document didn’t respond to the workers’ wage demand.

“The current situation needs Lonmin to put an offer on the table that will enable parties to engage constructively and objectively in the process,” he said, adding that Amcu would have been required to sit on the sidelines of negotiations even if it did support the peace accord.

NUM general secretary Frans Baleni said the union would encourage its members to return to work tomorrow, but that turnout would be low should these workers be intimidated by their striking peers.

“It’s a dilemma,” Baleni said, adding there was not much more the unions and Lonmin could do to stabilise
the situation.

“It will be up to government to play a bigger role,” he said.

Solidarity deputy general secretary Gideon du Plessis said the union was expecting increased levels of intimidation from tomorrow.

“We don’t expect a high turnout,” he said, adding the union was fearing for both the safety of workers and the future viability of the mine.

“This peace accord was the last way out from anarchy. This situation is not going to sort itself out. Somewhere, somebody will need to make a drastic decision,” he said.

Meanwhile, Lonmin said it was losing about 2 500 ounces of platinum production per day, implying a loss of some 70 000 ounces during the four weeks of the strike so far.

This was equal to about R800 million in lost revenue. Lonmin has debt facilities totalling $945 million, of which it had utilised $520 million as at March 31 – the last time it reported financial figures.

The company earlier said the lack of income would result in it breaching some of the conditions attached to the debt facilities, and that it was renegotiating its position with its consortium of banks – a situation made much more difficult in the absence of meaningful production.

Should such negotiations fail, it might have to ask shareholders to pump new funds into the company for an amount enough to cover the debt facility.

Lonmin spokesperson Sue Vey said the company would not yet issue an ultimatum to workers, although it was confident many workers would turn up tomorrow.

“The current situation cannot carry on indefinitely. At some point we’re going to have to make some decisions based on financial realities. We’re not at that point yet,” she said.

According to Justin Froneman, an analyst at SBG Securities, there remained much uncertainty in terms of the length of the strike, and its impact on the company’s earnings and balance sheet.

 “If we don’t see some resolution next week, I think Lonmin will have to make some tough decisions on some
of its operations,” he said.

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