UPDATE 2-Platinum miner Lonmin recognises AMCU union, averts strike threat

Wed Aug 14, 2013 11:44am EDT

* Agreement recognises hardline union as dominant at Lonmin

* AMCU displays more disciplined focus

* Friday is first anniversary of Marikana mine massacre

* Lonmin aims to produce 700,000 oz this year

By Sherilee Lakmidas

JOHANNESBURG, Aug 14 (Reuters) - Platinum producer Lonmin and South Africa's hardline AMCU said they signed a recognition accord on Wednesday in a move that averts threatened strike action by the union.

The agreement, reached two days before the first anniversary of the massacre of 34 striking workers shot by police at Lonmin's Marikana mine, opens the way for wage talks between the Association of Mineworkers and Construction Union and the company that are expected to start within weeks.

While the deal heads off a potential strike over recognition, the pay talks are expected to be extremely tough, given AMCU is demanding pay hikes as high as 150 percent from Lonmin rival Anglo American Platinum, the world's top producer of the precious metal.

Members of AMCU, which claims most of Lonmin's workforce, have twice this year staged brief illegal strikes at its mines and had threatened to down tools again unless the company recognised it as the dominant union.

The agreement formally recognises AMCU as the majority union at Lonmin, the world's third largest platinum producer.

AMCU, which exploded onto South Africa's labour scene last year as it wrested tens of thousands of members on the platinum belt from the once unrivalled National Union of Mineworkers (NUM) in a turf war, has a well-earned hard line reputation.

Lonmin was at the centre of the labour violence last year in which more than 50 people were killed and has been recovering from a 2012 illegal strike, rooted in the AMCU/NUM rivalry, which forced it to turn to investors to raise more than $800 million to avoid breaching lending terms.

In recent months AMCU has displayed more disciplined focus, orchestrating brief closures to show displeasure while pursuing talks without resorting to the protracted and often violent wildcat action that marked its emergence.

In wage talks with gold and other platinum producers it is taking a forceful stance, seeking huge pay raises for the lowest-paid workers at a time when metal prices are falling.

But on Wednesday, Lonmin management and AMCU's leadership displayed a warmth unheard of just a few months ago.

At a press briefing, Lonmin's new chief executive Ben Magara, an affable Zimbabwean, introduced AMCU president Joseph Mathunjwa as "Bra Joe" - South African slang for brother.

"I'm delighted to announce the signing of our recognition agreement ... This is key to achieving peace, stability and prosperity for all," Magara said.

CHRISTIAN SOLDIER

Mathunjwa, a powerful orator who has won a loyal following in the shafts with his appeals to social justice, African nationalism and evangelical Christianity, said AMCU could do business with companies if treated with respect.

"It is possible to reach agreement with AMCU as long as you treat AMCU with dignity and respect," said Mathunjwa, the son of a Salvation Army preacher who thanked God and Jesus at the media conference for opening the way to a resolution.

AMCU's turf war with NUM rumbles on and members of both unions are still being killed, though it is not clear if these are all linked to union rivalry or to criminal activity in a country with sky-high rates of violent crime.

NUM is a key political ally of the ruling African National Congress and the government is keen, ahead of elections in 2014, to avert a repeat of last year's mayhem and violence which triggered credit downgrades for Africa's largest economy.

If Lonmin can get through this financial year without strikes, it expects to produce more than 700,000 ounces of platinum, around 15 percent of South African output.

Labour strife has spread to other industries. South Africa's biggest union for manufacturing plans to launch an open-ended nationwide strike on Monday in the country's key auto sector in a dispute over pay affecting over 30,000 assembly line workers.

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