No. 4 Shaft at Lonmin’s
Marikana mine “’
all operations
closed down
Johannesburg, South Africa — 15 August 2012 – The world’s no. 3 platinum producer Lonmin has shut its South African mining operations, and its shares tumbled yesterday, after violence caused by a feud between rival trade unions killed at least nine people at its main Marikana mine.

Reuters reports that Lonmin, already struggling with low prices and weak demand, may miss its annual production target of 750,000oz, as the quarter to the end of September is typically its best. Its share price has fallen more than 4% in London and Johannesburg.

The London-based company accounts for 12% of global platinum output and the shutdown has driven the spot price of the precious metal as much as 2% higher.

Two policemen and two security guards were among those killed in the weekend clashes at the Marikana mine, about 100 km northwest of Johannesburg.

It was the deadliest violence yet in a membership turf war between South Africa’s dominant National Union of Mineworkers (NUM) and the newer Association of Mineworkers and Construction Union (AMCU).

Executives at Lonmin said that all the company’s shafts across the South African platinum belt had been closed down, with only essential services such as ventilation operating.

“Until the place is safe we don’t want to talk about production,” Lonmin executive vice-president Barnard Mokwena told a press briefing at Marikana.

The company said its ore processing division remained operational, but stockpiles were low.
The AMCU-NUM rivalry, which had already caused friction at Lonmin’s Karee mine, had now spread to other shafts at a time when the company was cutting back on investment plans in the face of weak demand and shrinking margins.

Hundreds of police officers, including units mounted on horseback, backed by armoured vehicles, descended on the Marikana facility to prevent any repeat of the violence.

Police helicopters clattered overhead as officers set up control checkpoints and laid down barbed wire. In a nearby township, a group of men, apparently mine workers, gathered carrying sticks and bars.

Speaking to reporters near Johannesburg, South African mines minister Susan Shabangu, said she was prepared to intervene to try to solve the Marikana dispute but did not say how.

“It’s quite clear that it’s rivalry between the two unions. If this matter continues we are going to be involved in the process of making sure we find peace,” she said.

The latest violence began on Friday during an illegal strike held by 3,000 rock drill operators at Lonmin’s Western Platinum mine. AMCU and NUM members clashed, and police and security guards trying to restore order were caught up in the violence.

Source: Reuters Africa. For more information, click here.