Lonmin Mining Company Attempts To Resume Platinum Ore Extraction
Lonmin threatened 3,000 of its striking miners with sanctions and even dismissal unless they returned back to work. As a result, about a quarter showed up at the Marikana mine on Monday. “Attendance has started slowly but is now up to 27%. But it is unclear if the striking workers are returning.” said a company’s spokesperson. With such a small part of the workforce present, it is hard to say when ore will once again be extracted from the earth.
Forty four people in total were killed in the violent clashes at the South African mine last week. The conflict started when the workers stopped their work, left the mine and demanded their wages to be trebled from 4,000 rand (£306) to 12,500 rand (£957). The situation quickly escalated, fuelled by an ongoing feud between rival unions. The police intervened and 34 miners armed with machetes, spears and handguns were gunned down in what became the bloodiest mining conflict the region has ever seen. Two hundred and fifty-nine strikers were arrested and will appear in the Rustenburg magistrates court facing a variety of charges including murder and public violence.
!m(/uploads/story/270/thumbs/pic1_inline.png)South African president Jacob Zuma has declared a week of mourning for those killed in the violence. Mr. Zuma also called for a commission of inquiry to investigate the matter.
The media in South Africa suggests that many of the workers will not return to work despite the ultimatum they are facing from their employer. “People have died already so we have nothing more to lose … we are going to continue fighting for what we believe is a legitimate fight for living wages. We would rather die like our comrades than back down.” said Kaizer Madiba, a miner at the Marikana mine, according to The Times. The South African Broadcasting Corporation reported that workers have once again started to gather at the rocky hills where the shooting took place last week. There is no police presence but mine security blocks all entrances to the mining areas.
Lonmin’s chief financial officer said: “As the government has made clear, it is in the interests of our workers and the country, as well as the company, that the mines are operational. We all have a long way to go to rebuild trust and try to come to terms with what has happened, but those who rely on us and want to work deserve the chance to do so.” He also added that if there was any danger to the workers, the company would not be requiring their presence and close cooperation with the police will continue in order to ensure the safety of everyone at site.
Shares of the mining company have been sliding down for six consecutive days, with most recent drops of 4.7 per cent in London and 3.8 per cent in Johannesburg. Analysts have warned that in its current state, the mining company might be forced to overhaul its debt and raise cash on the equity market. “A $1 billion rights issue, as compared to its current $2 billion market cap, will be a difficult proposition, but strategically, could provide them with a longer-term benefit,” Nomura analysts said in a Monday note.”However, with such an uncertain future we continue to see the share price as too high and re-iterate our ‘reduce’ recommendation.” Deutsche Bank also further cut its investment recommendation from “hold” to “sell”.
The recent events drove platinum prices slightly up to $1,460/oz but the industry remains unprofitable as it suffers from overstaffing, overproduction and low prices.
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