Could the wildcat strike which led to the death of 44 people and the injury of almost 80 more at the Lonmin Marikana mine have been prevented by different actions on the part of the company? Perhaps. But as things stand, the confluence of both global and local events ensured that there was only ever going to be one outcome. The last 10 days may have been a grim auger for the platinum industry’s future. By SIPHO HLONGWANE.
In the aftermath of a bloody week at the Marikana shaft of Lonmin PLC, after it was made clear that some of the miners engaged in a wildcat strike action were happy to resort to violence to get their point across and that the police were equally happy to respond with heavy machine-gun fire at close quarters, an uneasy truce of sorts was reached. The police kept their distance from the squatter camp (the centre of all the action) outside the mine, and the miners, for their part, kept their protest actions limited to large community meetings. In the calm, politicians and the press could move in and out of the camp. In the towns nearby, there was a general busyness as politicians, the police and the public bustled about between hospital visits, meetings and the Ga-Rankuwa magistrate’s court. The government laid on an impression of Doing Something and the grieving community did the same – whether it was morgue visits, protesting at the court or holding meetings back at Marikana.
All along, however, Lonmin was absent. There were press statements and some media appearances (especially in the early stages), but after the police killed 34 people and injured 78, the company’s representatives physically disappeared from the scene.
There had been an ultimatum to workers. If they weren’t at work by Friday, they would be fired. It got bumped back to Monday morning as President Jacob Zuma declared the next week one of mourning. A statement by Lonmin on Monday said that only about one in five miners had reported to work. The deadline was nudged back to Tuesday.
What was the rush to get platinum production back up, considering that the situation had not been adequately resolved, not to mention that the dead miners weren’t all fully identified and buried?
The strike had hit Lonmin’s financial standing immediately. The company shares plunged as the news of the shootings spread around the world, and it admitted that it would most likely miss its production target of 750,000 ounces of platinum due to the closure of the Marikana facility. There was also the possibility of the company having to swallow more debt. “In its third quarter production report published on July 26, 2012, Lonmin stated that net debt [remained] well within the limits and terms of its existing bank debt facilities. The Company continues to monitor the position closely regarding the additional pressure which the current disruption to production may put on its bank debt covenants when they are next tested on 30 September,” it said in a statement.
Lonmin could have given its employees the ‘work, or else’ order because it just could not afford the delay.
But the global price and demand for platinum tells a different story. The metal is used mainly for expensive jewellery and as a catalyst in low-emission diesel vehicles. The global recession has resulted in a contraction in Europe, the biggest market for these cars. According to the European Automobile Manufacturers' Association, new car sales in European Union countries dropped by 7.4% in the first half of the year.
“Platinum has dropped 18% in price since the end of February. On Wednesday, the front-month futures contract for August delivery inched down 20 cents to $1,408.70 a troy ounce on CME Group's New York Mercantile Exchange. Prices had hit a seven-month low of $1,382.30 on July 24,” the Wall Street Journal reported.
However, even as the platinum price dropped, production didn’t immediately do so as well. Quite simply, platinum producers could not just close facilities in South Africa, where 75% of the world’s platinum is mined. Politics and an inflexible labour market prevented it. When several platinum producers announced that they would be forced to close facilities and cut jobs, mineral resources minister Susan Shabangu called meetings and asked them not to cut jobs. She commissioned a report into the industry and was still pondering on it when the Marikana shootings happened.
In the meantime, Anglo American Platinum shut down one of its mines in Marikana and sacked 1,400 people. Business Day said, “…[A]nalysts hailed the move to shut Marikana, in Rustenburg, and urged other South African producers to consider a similar course of action in order to balance the oversupplied market. Platinum producers have long complained about a drop in demand and rising operational costs including labour, electricity, chemicals and water among others.”
Since last week, when the wildcat strike first started at Lonmin’s facility, the price of platinum has risen. On Monday, the price hit a six-week high of $1,477.50 an ounce. The strike provided a temporary balance to the global price of platinum, even though Lonmin was not in a position to benefit.
The shootings have generally been characterised as a union turf war between the established National Union of Mineworkers (NUM) and the new The Association of Mineworkers and Constructution Union (AMCU). A former negotiator said that the problems were compounded by the fact that as far back as 2010 when NUM (already fast losing popularity and only sitting at about 50% representivity in the general workforce) colluded with Lonmin to make it more difficult for the newer union to get a foothold. The company operates on a basis of agreeing to grant collective bargaining rights to one union with more than 50% membership, and by combining several small bargaining units, it made it much harder for AMCU to get the 30% figure that would grant it limited rights, and the outright majority that could unseat NUM. At operations like the Marikana, where inequality between the employees was starker than other places, this move left many workers who were disenchanted with NUM out in the cold. This is why the strike was led by rock-drill operators, typically the least educated and poorest of all miners.
Since collective bargaining works on a winner-takes-all-principle, it can potentially result in the main union not representing a large number of workers on certain sites.
The problems at Marikana are also further compounded by the fact that it is not just the workers of one mine that live and work in the nearby squatter camp – the patterns of inequality and the resultant anger are even repeated among rock-drill operators who work for different mining companies. The pay-hike granted to Impala Platinum workers would have angered the workers who work for Lonmin.
Given the weak global market for platinum over an extended period, Lonmin was probably not in a position to offer big pay hikes in any case. The company did not respond to our calls for comment.
However, in the platinum industry, the relationship between the bargaining union and the employer is one set out in company rules and can differ, according to the executive director of The Esop Shop, Gavin Hartford. The extent to which Lonmin could ignore NUM and deal with outsiders like AMCU is set out by its own agreement with the big union.
Hartford, a former organiser and negotiator for the National Union of Metalworkers of South Africa, said a bargaining deal that lowered thresholds for new entrants would go a long way in diffusing worker dissatisfaction. “Facilitating the entry of new unions into bargaining agreements would introduce greater democracy and competition for members based on level of service,” he said.
The Lonmin debacle might be helping rival companies in the short term by raising the price of platinum, but someone else somewhere on the platinum mining belt will likely find themselves in a similar bind, and it does not look like European car buyers are going to be in a position to help out anytime soon.
A mining industry insider who spoke to Daily Maverick said that the whole industry was facing an extremely difficult time and the type of violence seen at Marikana could return at other facilities.
“If the workers agree to return to work, the correction to the supply of platinum will return, the price will slump and we will be back to square one once again,” he said. But that did not mean that there was no way out of the current situation from the beginning. The most important thing would have been to ensure that the company had an open channel of communication with people who had control over them, and then establish clear timelines towards some kind of a common goal.
“It has been done before. There have been strikes where the company has recognised that the shop stewards have lost control of the miners. It is possible to ask the stewards to step aside and tell the men to send through new representatives to negotiate on their behalf.
“After that, an independent mediator must be called in. These things take time, but there must be a clear timeline. The mediator can hear the demands, and then look at the books of the company and tell the men, ‘this is what they can afford to give you’. It works. In some cases, the men have agreed to go back to work while mediation takes place,” he said.
The worst thing that Lonmin could have done was to shut itself off from the disaffected miners all those months ago. It stopped them from realising that the anger was reaching a crescendo long before the first shots were fired. They might have been able to at least solve the labour crisis before the perfect storm of local and global events hit. It’s too late for that now. DM