Lonmin miners strike in South Africa, unnerving investors

MARIKANA, South Africa Tue Mar 5, 2013 12:06pm EST

A man rides his bike past the Lonmin mine outside Rustenburg, in the northwest of Johannesburg November 9, 2012. REUTERS/Siphiwe Sibeko

A man rides his bike past the Lonmin mine outside Rustenburg, in the northwest of Johannesburg November 9, 2012.

Credit: Reuters/Siphiwe Sibeko

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MARIKANA, South Africa (Reuters) - Workers went on a wildcat strike at Lonmin's (LMI.L) Marikana platinum mine in South Africa on Tuesday, embarrassing the company as it launched a publicity drive to try and show it had recovered from months of deadly labor unrest.

The world's third-largest platinum producer invited journalists to tour the mine, but the public relations exercise backfired as thousands of workers took advantage of the media spotlight to down tools at four shafts.

Confusion mounted after the company said they had all returned to work, only to revise its statement when it became clear miners at two of the shafts remained above ground.

The conflicting statements sent platinum prices, South Africa's rand and Lonmin's shares on a bumpy ride, highlighting nerves over the health of the country's key mining sector after months of labor unrest.

Disruptions at Marikana are particularly closely watched as it was the site where 34 striking miners were shot dead by police last August in South Africa's deadliest security incident since the end of apartheid in 1994.

"Things are still not right," said Johannes Liofo, a rock drill operator at Lonmin's Karee mine. Speaking at a rock face and drenched in sweat, he said he was still waiting for working conditions to improve.

Lonmin said workers affiliated to the Association of Mineworkers and Construction Union (AMCU) refused to go underground on Tuesday, demanding the closure of the offices of a rival union.

AMCU has a reputation for militancy and one of its shift bosses, Phahla Mekela, said there was still a high level of absenteeism at the shafts, something he attributed to widespread resentment among workers and a long list of demands still unmet.

Lonmin spokeswoman Sue Vey said the miners had taken advantage of the presence of the world's media to stage a stoppage and make their point.

"They made use of the opportunity to convey their message. They have been heard," she said.

TURF WAR, ROUND TWO

AMCU Members are demanding the closure of the offices of the rival National Union of Mineworkers because they say it is no longer the largest body representing workers there.

The turf war between AMCU and NUM, which is a powerful political ally of the ruling African National Congress, was at the heart of much of the unrest that hit the platinum and gold mining sectors in South Africa last year, triggering labor violence that killed over 50 people.

The union rivalry has shaken investor confidence in Africa's largest economy and the world's top platinum producer and led to credit downgrades for the country.

The rand initially fell to a session low of 9.1173 and then recovered after the company said the strike was over. Lonmin's share price fell as much as 2 percent in Johannesburg while platinum prices jumped over 1 percent, leap-frogging gold before easing back to parity with bullion.

Investors are also nervously monitoring union reaction to plans by Anglo American Platinum (AMSJ.J), the world's top producer of the precious metal, to restore profits by mothballing two mines and cutting up to 14,000 jobs.

The platinum belt northwest of Johannesburg remains a flashpoint of social and labor tension after it was the scene of riots last year and widespread intimidation as AMCU recruited workers angered at the NUM leadership, which they see as out of touch with the rank and file and too close to the ANC.

Glaring income disparities and grinding poverty in the shantytowns around the platinum mines have also fueled the violence.

(Additional reporting by Jan Harvey in London; Writing by Ed Stoddard; Editing by Andrew Heavens)

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