April 3, 2014 / 2:05 PM / 4 years ago

UPDATE 2-Lonmin declares force majeure, says workers want strike to end

* Strike is biggest in living memory

* Companies have lost over $1 bln in revenue

* Lonmin says survey shows workers want strike over (Adds background, details, quotes)

By Ed Stoddard

JOHANNESBURG, April 3 (Reuters) - Platinum producer Lonmin has declared “force majeure” with some contractors at its South African mines due to the effects of a lengthy strike, meaning a drop in business for those suppliers and a growing impact on the economy as a whole.

The announcement by Lonmin Chief Executive Ben Magara follows similar moves by rivals Impala Platinum and Anglo American Platinum as the 10-week stoppage over wage demands by the Association of Mineworkers and Construction Union (AMCU) drags on.

“Every day this strike lasts, 67 million rand ($6.3 million) which is supposed to be spent on goods and services is not being spent,” Magara told a media briefing in Johannesburg, referring to spending by the three companies collectively. Force majeure is a term used by the likes of miners and oil companies when forces beyond their control prevent them meeting obligations.

Magara said 7 million rand was not being paid each day in taxes and royalties because of the strike, though such numbers “do not tell the story about the increasing concern of our investors about our operating environment and our customers who are finding us unreliable.”

Lonmin had not gone to the open market to buy platinum to supply customers and would do so only as a last resort, Magara added. Rival Amplats has said it will do so if needed as the strike has hit 40 percent of global output of the precious metal, used for emissions-capping catalytic converters in automobiles.

There are no signs yet of an end to the strike by the hardline AMCU, with the sides poles apart on the issue of wages and no direct talks scheduled.

But Magara said there were signs of rank and file fatigue as the strike drags on and that a survey conducted via cellphone text messages showed most striking Lonmin workers wanted to return to work.

“The overwhelming majority of our employees say they need to go back to work,” he said, noting that “20 percent of their earnings are gone for the year. They are wiped out.”

“For us the ounces are still in the ground, but for our employees this is indeed game changing,” he said.


A spokeswoman said the company had about 20,000 mobile phone numbers for its workers, which it had used for the survey. Around 23,000 Lonmin workers are on strike.

The companies say AMCU is using intimidation to keep its members in line, allegations the union denies though its brief history on the platinum belt has been violent.

AMCU emerged as the top platinum union in 2012 after poaching tens of thousands of members from the once unrivalled National Union of Mineworkers in a bloody turf war in which dozens were killed and a wave of wildcat strikes was unleashed.

The current stoppage is legal and has been far less bloody than the periodic eruptions of 2012, but may ultimately prove more damaging. As it enters its 11th week, no single strike in living memory has approached its scale in South Africa’s mines.

The trio of producers has so far lost around 11.3 billion rand in revenue, while over 5 billion rand in employee earnings are gone, according to an industry website. (here)

Amplats said last week job cuts were a certainty because of strike-related losses and its Rustenburg operations, at the epicentre of the stoppage, would not make a profit this year.

The strike has had little impact on spot prices which were around $1,432.00 an ounce on Thursday, slightly under the levels fetched on the eve of the strike in late January.

AMCU President Joseph Mathunjwa is a Salvation Army lay preacher who styles himself as a warrior for God in a class war being waged on behalf of poor black South African miners, whom he says have not benefited from the country’s mineral wealth.

In a typically fiery speech on Thursday in front of around 2,000 miners outside Lonmin’s Johannesburg headquarters, Mathunjwa accused mining companies of paying “slave wages” and manipulating the platinum market to boost their profits.

“Comrades, gone are those days that we are threatened over our own minerals by foreign capital. This is the time. We are drawing the line,” he thundered.

$1 = 10.6078 South African Rand Additional reporting by Ed Cropley; Editing by David Holmes

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