Mining Week 34/’12: Lonmin labor dispute turns deadly
August 18, 2012
Top Stories of the Week:
- Fights between police and striking Lonmin workers results in over 40 deaths
- Over 40 miners and several police officers were killed in clashes with the police at Lonmin’s Marikana mine in South Africa, where workers had been on strike for about a week demanding wage increases.
- Competing trade unions trying to ‘control’ the workforce are mentioned as part of the reason the conflicts turned into strikes and violence.
- On August 16th, in the midst of the developments around the violence in South Africa, Lonmin’s CEO was diagnosed with serious illness and is temporarily replaced by the chairman of the board.
- Sources: Lonmin press release; Mining Weekly; Wall Street Journal
- Anglo American finalizes acquisition of 40% stake in De Beers
- Anglo American paid $5.1bln for the 40% stake of De Beers previously owned by the Oppenheimer family. The company now owns 85% of the major diamond producer.
- The deal was announced announced in November of last year; diamond prices have dropped significantly since that announcement.
- Sources: Anglo press release; Financial Times
Trends & Implications:
- The global platinum market is facing significant oversupply, keeping prices low and pushing platinum miners into the red. Lonmin is the highest cost producer among the major producers, putting it in a position in which is can’t keep workers satisfied without pay raises while it can not raise wages without making big losses. Anglo Platinum currently controls approx. 40% of global production in mines in South Africa and Zimbabwe. Various other miners have called on Anglo to cut production to make prices rise.
- The social and political situation in South Africa is causing most international mining companies without strong ties to the country to think twice before investing in the country: high tax rates, active and unpredictable unions, political leaders calling for mine nationalization, and the startup of a ‘national mining company’ result in a very high country risk level.
©2012 | Wilfred Visser | thebusinessofmining.com