Lonmin needs to pay up to avoid another Marikana showdown
Banging on about illegal strikes is missing the point – Lonmin won’t regain control of its only mining asset until it gives its workers no reason to walk out.
So what if Lonmin cajoles 3,000 rock drillers back to work.
The showdown at is Marikana platinum mine in South Africa is brutal proof of one thing: it is the workers, not the bosses, who are currently in control of this company. Even 44 deaths doesn’t change that dynamic.
Spanning an area the size of the Isle of Wight, Marikana pretty much is Lonmin. It accounts for 96pc of its production. But the horrific goings-on have demonstrated how little control the company actually has over its only real asset at just about every level – political, financial or human. No wonder investors are running for the hills.
To gain any authority, Lonmin must change tack fast. But, it won’t do that all the time it insists on dealing with symptoms rather than causes.
Since the drillers walked out on August 10, all Lonmin’s managers have done is bang on about the strike’s illegality. Sure, they may have the law on their side. But look at the cost. Thursday’s massacre, at the hands of the police, came after a misguided ultimatum that strikers return to work or be sacked.
Even after the bloodshed, there have been two similar ultimatums, rather undermining the sincerity of the condolences with which they were interspersed. Depressingly, here was the main message today from Mark Munroe, executive vice president for mining: “By 7am tomorrow we expect workers to return to work. After that Lonmin has the right to fire them.”
Maybe there are queues of wannabe rock drillers, lining up for dangerous eight hour shifts with a 25kg tool right at the rock face – labouring for the princely sum of £305 a month. But you’d expect new recruits to be just as susceptible to infiltration by Amcu, the militant Association of Mineworkers and Construction Union that’s fomenting discontent among the country’s disenfranchised, illiterate poor.
Sure, it is asking too much of any company to control what amounts to internecine warfare between this upstart union and the members of the National Union of Mineworkers, with its ties to the ruling African National Congress. But, given that the 3,000 rock drillers can halt production – even if the other 25,000 Marikana employees want to work – it must be in Lonmin’s interests to make sure they don’t become the focus of Amcu’s recruiting drive. Today, a precise 27.5pc of staff returned to work but as Munroe admitted: “For all intents and purposes, there was no ore production.”
Besides, getting Marikana producing again is crucial to the finances of Lonmin, whose shares have now halved in a year and which, unluckily, finds itself without chief executive Ian Farmer – hospitalised last week with an unrelated illness. Talk of a $1bn rights issue may well be overstating things but every day without production brings Lonmin closer to breaching its bank convenant test on September 30.
Naturally, Lonmin balks at rewarding workers who came out on an illegal strike with the tripled salaries they want – not least given how platinum prices have plunged this year, even allowing for the recent spike.
But Lonmin has to make some kind of goodwill gesture. One lesson of Marikana is that the company’s costs – if not those of all South African miners – will have to rise to ensure it keeps a workforce resilient to Amcu.
Munroe made much today of Lonmin’s contribution to the workers’ livelihoods “in terms of health, water, education and housing”. It’s clearly not been doing enough.