Cost implications dilute Lonmin joy
THE EUPHORIA over the deal ending the Marikana strike quickly evaporated yesterday as concerns about the impact of the double-digit wage settlement intensified and Cyril Ramaphosa, a prominent Lonmin shareholder, admitted that his investment in the company was now under water.
While Lonmin reported that its Marikana mine in Rustenburg saw 80 percent attendance as most miners who had been on strike for more than a month returned to work, National Union of Mineworkers (NUM) general secretary Frans Baleni said the Lonmin settlement might spark copycat pay demands at other mines.
Analysts have said that the wage deal set a troubling precedent to bypass existing bargaining protocols and table unrealistic wage demands.
Lonmin’s shares closed 6.31 percent lower at R82.26 on the JSE yesterday.
“The temporary relief seen at the end of the strike has been replaced by ongoing concerns about demand and cost,” Alison Turner, a mining analyst said.
Employees at Marikana would undergo a four-day induction on health and safety, and blasting would resume next week, Lonmin said.
Simon Scott, the acting chief executive at Lonmin, said: “We have to plot the costs for wages carefully, we must map the way forward carefully.”
He added that Lonmin, with the industry, was exploring the feasibility of setting up a centralised bargaining process.
Scott said Lonmin had been in discussions with the banks regarding its covenants. “We have told the banks that the situation has not been normal. We have highlighted to them that we may breach the conditions.”
The Lonmin executive would not comment on whether it would dismiss staff to offset the cost of the salary increase.
Sapa reported that Peter Major, a mining analyst at Cadiz Corporate Solutions, said Scott had estimated Lonmin would spend R190 million on wage increases of up to 22 percent.
Baleni said NUM planned to meet with the Chamber of Mines today to table a proposal to bring forward wage negotiations due next year in the gold and coal sectors because they would be vulnerable to strikes.
“This salary agreement at Lonmin is a bad precedent. Out of an unprotected strike with violence, people have received increases. This can easily turn into copycat strikes.”
Moody’s Investors Service warned that the awarding of the increase would set the tone for aggressive wage negotiations by other unions, which could have a negative impact on rated mining companies.
“In Moody’s opinion, the South African platinum sector is more vulnerable to labour unrest and wage demands than its gold sector, due to differences in the union membership and the percentage of workers who are unionised,” it said.
Ramaphosa said on SAfm yesterday: “[Lonmin] is a good asset… but the cost structure has just been rising and the settlement… is going to put pressure on the costs.”