5th Mar 2014 12:14
LONDON (Alliance News) - Lonmin PLC Wednesday said negotiations over ongoing strike action in South Africa have been suspended after parties could not reach any form of consensus, and it will no longer be able to meet its full year production guidance.
The platinum mining company said the Commission for Conciliation, Mediation and Arbitration suspended talks between Lonmin, Anglo American Platinum, Impala Platinum Holdings Ltd and the Association of Mineworkers and Construction Union after deeming the parties current positions to be too far apart to warrant further mediation at this point.
Strikes over pay and conditions, which started on January 23, have significantly affected operations at the mining companies.
The major platinum producers proposed to the AMCU a package with wage increases between 7.5% and 9%, with the lowest paid employees receiving a 9% increase in year one, above the current South African inflation rate of 5.4%.
Lonmin said that the AMCU moved from its opening demand of an immediate ZAR12,500 basic wage to a revised demand of ZAR12,500 over four years during the talks, but that this represents an increase of 30% to wages in year one and this is unaffordable to the parties involved.
The platinum miners' strike action in South Africa has had a significant affect on the major company's operations and Lonmin said on Wednesday that it has lost around 90,000 saleable platinum ounces during the period, meaning that the company will not achieve its sales guidance of in excess of 750,000 platinum ounces for the full-year ended September 30.
Lonmin added that sales for the full-year are expected to fall further, the longer the strike continues and unit cost guidance as a result will also be negatively impacted.
The company said it, along with the two other major companies, remains committed to finding a positive and sustainable resolution to the dispute and it will update the market when appropriate.
"We hope that AMCU will consult its membership on these latest developments and come to appreciate the importance of resolving the wage dispute without undermining the sustainability and employment prospects of this Company and indeed the industry. We continue to review our options to safeguard the business," Lonmin Chief Executive Ben Magara said in a statement.
In February, the Chief Executive of Anglo American Platinum - a subsidiary of Anglo American PLC - Chris Griffith said that court action might be taken in order to declare the strike illegal due to alleged violence by the AMCU.
At the time Griffith, along with the Chief Executives of Lonmin and Impala, said at a media briefing that the AMCU was trying to achieve its wage demands through strike action and criminal acts.
In 2012, 34 miners were shot dead by police during an illegal strike backed by AMCU at Lonmin's Marikana mine. Ten other people, including miners, police officers and security guards, were killed in the preceding week.
Anglo American shares were up 0.5% to 1,509.50 pence and Lonmin shares were down 2.8% to 292.60 pence, putting it in the highest FTSE 250 fallers Wednesday.
By Tom McIvor; [email protected]; @TomMcIvor1
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