Lonmin Miners Accept 22% Wage Rise to End Deadly Strike

on Sep 21, 2012

Lonmin Platinum (LON:LMI) mine and union representatives signed a wage increase deal on Tuesday (September 18), bringing to an end the six-week labour unrest that left 44 people dead. Thousands of miners at Lonmin’s Marikana operations in South Africa voiced relief and returned to work on Thursday (September 20), but their victory-of-sorts has taken a heavy toll on the South African mining industry.

After intensive negotiations between miners’ representatives and Lonmin mine officials, an agreement was reached to end the prolonged and deadly strike, avoid further financial losses for the company and also address the workers’ demands. According to a statement issued by Lonmin, the deal included a wage rise of between 11 and 22 per cent for all employees within category 3-8 bargaining units, as well as a one-off bonus of 2,000 South African rand (£148), both effective from 1 October 2012.

!m[](/uploads/story/429/thumbs/pic1_inline.png)“This is not what we were looking for, but it is much better than what we were being paid,” said Zolani Bodlani, who was leading the striking miners. Bodlani also said that workers had asked Lonmin management to pledge that they would work with the unions to ensure that wages reach the desired 12,500 rand (£926) a month within two years, Reuters reported. Although Lonmin is yet to respond, the company has previously argued that salaries of 12,500 rand are not feasible and would put many jobs at risk. The next round of negotiations is planned for October, where “unions will negotiate for another increase of around 12 per cent”, said Bishop Jo Seoka, speaking on behalf of the miners.

As part of the current agreement, Lonmin employees also had to return to work on September 20. Shouting “We are reporting for work” in Fanagalo, a pidgin mix of Zulu, English and other African languages, the Lonmin miners were in upbeat mood on Thursday. In the morning, Lonmin officials said that so far 77 per cent of their staff is at the mine and that numbers are expected to increase throughout the day. A spokeswoman for the company also said it will be “a couple of days” before the mine’s platinum output resumes.

Production at the mine had been stopped since August 10 when 3,000 rock drill operators went on an illegal strike. Violence related to the labour unrest left 44 dead. Amid the standoff the police opened fire on striking workers killing 34 on August 16, days after violent clashes between miners left 10 others dead, including two police officers. In consequence, Lonmin became the epicentre of a wave of unrest in the mining sector, with tensions forcing several other firms to suspend operations in the platinum belt of north-western Rustenburg.

Following Tuesday’s deal, the South African labour unrest is now threatening to spread even further with signs that miners at neighbouring operations are prepared to battle for a similar pay increase. On Wednesday (September 19), police used tear gas to disperse protesters near a mine run by top platinum producer Anglo American Platinum (PINK:AGPPY) after strikers there demanded the same pay increase as the one secured by those at rival Lonmin.
“The resolution of the Lonmin strike has given other workers a very public benchmark by which to measure their own remuneration,” said Nomura analyst Tyler Broda. “Other operations, which have been untouched up to this point, may well see pressure to increase basic packages,” he added.


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