South Africa: no sign of resolution to labour-based conflicts

Published by MAC on 2012-09-18
Source: Bloomberg, Reuters, Mining.com

Army deployed to "crack down" on mineworkers' dissent

Mine violence exposes labor unions' weakening grip

Bloomberg

17 September 2012

JOHANNESBURG - "We are sick and tired of the unions; they are liars," says Adam Thlolwe, a worker at the world's second-biggest platinum mining complex near Rustenburg, South Africa.

As Thlolwe and more than 40,000 workers defy the main labor unions and cripple the world's biggest platinum industry, officials at the Congress of South African Trade Unions gather in Johannesburg today facing accusations that they are too close to the government and companies to represent members' interests.

"Cosatu's leadership is in for a real grilling," said William Gumede, the author of 'Restless Nation: Making Sense of Troubled Times,' who worked for the group from 1986 to 1995. "The difference between them and ordinary members, the gap is so wide. Senior leaders are essentially a part of the establishment, while ordinary workers are really struggling."

The strikes over pay and working conditions, which are opposed by the National Union of Mineworkers, a Cosatu member, shut down operations at Anglo American Platinum Ltd., Impala Platinum Holdings Ltd., Lonmin Plc, the three biggest platinum producers, and Gold Fields Ltd.

At least 45 people have died at the Lonmin's Marikana mine, 34 of them killed by police on Aug. 16 when they opened fire at protesters.

Cosatu, which has 2 million members, will also face a major debate at its four-day conference over whether to support President Jacob Zuma at the ANC's elective conference in December. The group helped him oust Thabo Mbeki as party president in 2007.

Conference Debate

"There may be a groundswell from the union members for change in the ANC leadership," Gumede said. "Marikana is a symptom of all the frustrations that are going on in the country. The president has become a symbol of that."

The events at Marikana will "definitely" feature in the conference debate, Walter Theledi, the general-secretary of the Cosatu-affiliated South African Municipal Workers' Union, said in an interview.

"We've got to have some introspection and make sure we don't have a similar situation again," he said.

The South African rand fell as much as 2.9 percent against the dollar after the Aug. 16 shootings, while the cost of protecting the nation's debt using credit default swaps over five years rose 23 basis points between Aug. 15 and Aug. 31 to 152.

More than 3,000 delegates from Cosatu's 21 affiliate unions will decide whether to re-elect General-Secretary Zwelinzima Vavi and President S'Dumo Dlamini to five-year terms, according to spokesman Patrick Craven.

"We may see a very hard, tough contest for the leadership," Gumede said.
"Careers may end."

Apartheid Struggle

Cosatu was formed by black trade unions in 1985 as they joined the ANC's fight against white minority rule. Many of its members have risen to senior government positions.

Deputy President Kgalema Motlanthe is a former head of the NUM, while Cyril Ramaphosa, who remains on the ANC's top decision-making body and is one of the country's richest businessmen, founded the union.

Ramaphosa is a non-executive director of Lonmin and has stakes in the company's mines.

Through his companies he owns the McDonald's Corp. franchise in South Africa, a stake in a coal- mining venture with Glencore International Plc., and is the chairman of MTN Group Ltd., Africa's biggest mobile-phone company, and Bidvest Group Ltd.

Rival Unions

The mineworkers' rejection of their traditional negotiators has allowed rivals such as the Association of Mineworkers and Construction Union and the Committee for Workers International, a communist group, to recruit platinum miners and lead the strikes.

"I'm not happy with NUM, they don't represent us anymore," said Mcdonald Motsaathebe, a 35-year-old worker at Anglo Platinum who says he earns 5,500 rand ($715) a month with a 1,700 rand housing allowance to care for his wife and seven- year-old daughter. "Our salary is low, our houses are bad. We will go to negotiate as the workers, we have our own leaders."

Since the killings at Marikana, Julius Malema, the ANC's former youth leader who has become one of Zuma's strongest critics, has held rallies at mines urging workers to make the industry "ungovernable" and saying the traditional unions no longer represent workers.

Investor Interest

"They have lost the plot," Malema, who has campaigned for the nationalization of the mining industry, said in an interview. "NUM is representing the employer instead of representing the workers. They're not interested in workers, but in investors."

Dlamini, the Cosatu president, dismisses Malema and the AMCU as populists seeking to capitalize on the labor unrest.

"We've learnt out of the Marikana situation," Dlamini said in an interview in Rustenburg, about 169 kilometers (105 miles) northwest of Johannesburg, where most of the world's platinum is mined. "This has had the effect of strengthening us, not weakening us."

Gumede foresees further divisions in the labor movement because of the perceived disconnect between the workers and the union bosses.

"We're entering a period with extreme labor instability," he said.

---

Striking Marikana miners cut wage demands

Reuters

18 September 2012

JOHANNESBURG  - Strikers at Lonmin's Marikana mine in South Africa have cut their basic wage demand to below 11,000 rand ($1,300) a month to try to end a six-week strike that halted platinum output at the world's third-largest producer, a negotiator said on Tuesday.

The demand is still way above the offer on the table from Lonmin.

The company, which is offering increases of between 9 and 21 percent, has said 12,500 rand would put thousands of jobs at risk and challenge the viability of the business. Basic pay for most underground workers is currently around 5,400 rand.

A Lonmin official said talks between the various parties had extended to
3 a.m. (0100 GMT) on Tuesday. They are due to resume at 1000 GMT.

"The demands came down to below 11,000 rand," Bishop Jo Seoka, who has been mediating in the talks between Lonmin and workers, told Reuters.
"I'm very confident that something is going to happen today."

The strike turned violent last month, culminating in police shooting 34 miners at a rocky outcrop at Marikana, 100 km (60 miles) northwest of Johannesburg. In all, 45 people have died in the Marikana unrest, which has spread beyond Lonmin to other platinum firms and other parts of the mining sector.

Anglo American Platinum (Amplats), the world's top producer of the precious metal, said workers started trickling back to its Rustenburg mines on Tuesday after operations were suspended last week when machete-wielding strikers marched on shafts.

More details on shift worker attendance will be provided later on Tuesday.

South Africa is home to 80 percent of known reserves of platinum and is a major gold producer. Labour unrest this year has cost the industry 4.5 billion rand ($548 million) in lost output, President Jacob Zuma said on Monday.

Fearing the strike's growing impact on the economy and South Africa's investment reputation, the government launched a crackdown at the weekend that has included deploying members of the armed forces.

---

Striking Lonmin miners take 22% pay rise offer

Cecilia Jamasmie

Mining.com

18 September 2012

Workers at Lonmin's Marikana mine have accepted a 22% overall pay increase to end more than five weeks of deadly strikes.

The agreement reached Tuesday also includes a once-off payment of $250 (2,000 rand) to partly make up for what they didn't get paid while being on strike, told Associated Press Bishop Joe Seoka, a member of the negotiating team.

Also today world number one platinum producer Anglo American Platinum said it had resumed its operations in the strike-hit Rustenburg area.

"Anglo American Platinum Limited [Amplats] confirms that all of its Rustenburg operations have resumed, effective from today's morning shift," the company said in a statement.

South Africa's mining sector, which accounts for 6% of gross domestic product, has been repeatedly hit by disputes over low wages that reflect widespread anger over enduring inequalities in the economy.

---

Lonmin deal pressures other South Africa mining firms

By Ed Stoddard

Reuters

19 September 2012

A violent six-week strike at world No. 3 platinum producer Lonmin has come to an end with a hefty wage settlement that could stir more strife in South Africa's restive mining sector.

Lonmin's 11-to-22 percent pay hike deal with striking workers may be a red rag for others in an industry riven by income disparities laid bare by a wave of violent industrial action in which 45 people died last month.

As Lonmin's miners prepare to don their helmets and head back down the shafts, others are eyeing their gains greedily.

"We want management to meet us as well now. We want 9,000 rand ($1,100) a month as a basic wage instead of the roughly 5,000 rand we are getting," an organiser with the militant Association of Mineworkers and Construction Union (AMCU) at Lonmin rival Impala Platinum told Reuters.

He declined to be named for fear company recriminations.

AMCU exploded onto the South African labour scene in January when its turf war for members with the dominant National Union of Mineworkers (NUM) led to the closure of the world's largest platinum mine, run by Implats, for 6 weeks.

The discontent rolling through the platinum belt has found fertile ground in the shanty-towns that ring the mines.

The communities that serve the platinum companies sit side-by-side in the dusty "platinum belt" - proximity that will make the Lonmin deal a source of jealousy for workers from other mines.

Anglo American Platinum, the world's top producer of the metal used for catalytic converters in cars, was last week forced to suspend its Rustenburg operations, 120 kms (70 miles) northwest of Johannesburg, because of the unrest.

Those mines rebooted on Tuesday but its workers will be tempted by the pay hikes achieved just down the road in Marikana, where 34 striking Lonmin workers were shot dead by police last month in the worst such incident since the end of white rule in 1994.

"The ripple effects will continue to be felt. The outcome of the negotiation at Marikana will likely set a new benchmark for mining more generally and wage costs are set to rise substantially," JP Morgan said in a research note.

Wage hikes in the mining sector have been leap-frogging inflation for years, reducing margins in the industry as productivity has struggled to keep pace.

But your typical miner has several dependents to feed and so pay rises that outpace inflation may not go far as the gains evaporate at the kitchen table. Racing food inflation due to soaring global grain prices will only stoke workers' hunger.

The gold sector has also not been spared, with 15,000 miners at the KDC West operation of Gold Fields, the world's fourth largest bullion producer, on an illegal strike.

However, unlike the platinum miners, Gold Fields and its bigger rival, Anglo Gold Ashanti, have both diversified away from their home base and now get half or more of their output from outside South Africa.

Gold Fields' chief executive Nick Holland told Reuters on Monday his company could "go on for quite some time" despite the KDC West disruption.

Platinum producers do not have this choice because 80 percent of the metal lies below South Africa's soil. Lonmin was brought to its knees by the strike because all of its mines were effectively shut.

($1 = 8.2390 South African rand)

(Editing by Ed Cropley)