Workers return, but unrest could still spread in South Africa

August 22, 2012

On Aug. 20-21 about one-third of the workforce returned to duty at Lonmin’s Marikana platinum mine following a clash between miners and police that left 34 miners shot to death by police. However, things have not calmed completely in the South African mining region.

On Aug. 22, labor unrest in South Africa’s platinum belt spread as did concerns that anger over low wages and poor living conditions could erupt into more violence.

Reuters reported that the strike at Lonmin’s Marikana mine has driven up platinum prices and stoked worries about investing in Africa’s biggest economy, where chronic unemployment and massive income disparities threaten social stability.

Anglo American Platinum, the world's top platinum producer said it had received a demand for a pay increase from its South African workers, while a trade union said miners at Royal Bafokeng Platinum's Rasimone site had been blocked from reporting for work by colleagues.

The price of platinum leapt to its highest since early May on Wednesday, driven by concern about supply from South Africa, which holds 80 percent of the known reserves of the metal, used in jewelery and for catalytic converters in cars.

Spot platinum rose by as much as 1.5 percent to touch $1,524.49/oz.

Ten people had been killed before police opened fire on striking miners on Aug. 16, shooting dead another 34 in the worst such bloodshed since the end of apartheid white rule in 1994. President Jacob Zuma has ordered an inquiry.

The labor troubles were touched off by a violent turf war between labour unions at the Marikana mine. Similar rumblings have emerged at other mines.

“There is a very high chance that this is going to be contagious,” said SBG Securities platinum analyst Justin Froneman. “Whether or not it has been orchestrated and arranged remains to be seen, but certainly the fact that this has spread in what we viewed as a previously stable labor force is slightly concerning.”

Reuters reported that workers have trickled back to Lonmin’s Marikana mine this week, but most have stayed away for fear of being caught in the conflict between the long-established National Union of Mineworkers (NUM) and the militant breakaway Association of Mineworkers and Construction Union (AMCU).

 

 

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