Only third of massacre-hit mine Lonmin's workforce report for duty as bosses back down from sacking threats
Tuesday 21 August 2012
The South African mine that saw 34 of its workers shot by police suffered further disruption today after only one in five wildcat strikers reported for duty.
Platinum miner Lonmin had ordered 3,000 illegally-striking rock drill operators to return to work at its Marikana mine today or risk losing their jobs, while it appealed to a further 25,000 staff and 10,000 contractors to report for duty.
But it backed down on its threat to sack absent workers today as it looked to strike a more conciliatory tone in line with the official week of mourning declared by president Jacob Zuma.
The group said a third of its 28,000 workforce turned up, with many being put off by the fear of more violence.
Just 19.5 per cent of the 3,000 illegally-striking rock drill operators were on shift, although the firm described the situation as calm.
Production, which had restarted yesterday, was still significantly lower than normal as the incident drags into its second week.
But shares rose 2 per cent after falls of 20 per cent since the incident, which saw 34 miners shot by police in one of the worst displays of state violence since apartheid ended in 1994.
The rock drillers went on an illegal strike over pay.
They claimed they were paid a minimum wage of 5,500 rand (£420.55p) a month and demanded it be increased to 12,500 rand (£955.80p), although the figures have been disputed by Lonmin.
The group had previously issued an ultimatum to illegal strikers to return to work on Monday or face the sack, but extended the deadline to today after just 30 per cent of its staff turned up for duty. It has now said there will be no dismissals this week.
Lonmin's shares have suffered in recent days amid broker downgrades following reports it is considering a one billion US dollar (£640 million) emergency fundraising move.
Deutsche Bank, for example, recently estimated that Lonmin will lose at least 50,000 ounces of production as a result of the crisis and said it will make a loss this year, having previously expected a small profit.
Lonmin has dismissed reports that it will need to raise funds as "speculation", yet fears remain that it may be forced to make some form of cash-call to shareholders as the closure of its biggest mine in South Africa puts a significant strain on its income.
The disruption at the Marikana mine is understood to be a significant hit to Lonmin as it accounts for around 90 per cent of the group's output.
Lonmin is also believed to be asking for leniency from its banks as it struggles with debts.
The mining giant was already under pressure after platinum prices slumped in the past year as demand for the metal has dropped from car-makers in the crisis-hit eurozone.
Its plight has also been compounded in the past week by news that chief executive Ian Farmer has been admitted to hospital with a "serious illness" and will be temporarily replaced by chairman Roger Phillimore.
Shares have nearly halved in the past year.
Lonmin is also approaching its end of financial year, which will trigger compliance tests with its banks.
The group said last week that it "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 September 30".
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