Crisis escalates at Lonmin mine

 
Michael Bow
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LONDON-listed miner Lonmin was battling to keep control of its South African mining operations last night as violent clashes between police and armed mineworkers left several dead.

Violence erupted between 3,000 protesting Lonmin employees, some carrying machetes and knives, and police at the platinum mines in Marikana following a tense standoff that has been threatening to escalate since the start of the week.

Last night, reports from South African Press Association said 18 were dead. Video footage appears to show police firing on protesting workers, who are demanding higher wages.

In London, Lonmin announced that in a separate incident chief executive Ian Farmer had been rushed to hospital after being diagnosed with a serious illness, leaving chairman Roger Phillimore in charge.

Shares in the miner, which had enjoyed a lift earlier in the day along with the rest of the sector, closed almost seven per cent lower, as news of the violence broke.

Tensions have been rising at the mines over a dispute between two rival unions, the National Union of Mineworkers and the more militant Association of Mineworkers and Construction Union. They are fighting over the recruitment of members.

Last weekend, eight Lonmin employees and two policemen were killed in clashes.

Phillimore said last night: “It goes without saying that we deeply regret the further loss of life in what is clearly a public order rather than labour relations associated matter.”

Lonmin, which is the third largest platinum producer in the world, said it was “unlikely” to meet its production targets following the disruptions.

Forecasts for an annual increase in unit costs, issued this month, have also been raised and the crisis could pile additional pressure on its ability to pay back its bank debts, the firm said yesterday.

Platinum, which is used to make catalytic converters for car engines as well as jewellery, jumped 2.8 per cent to a six-day high yesterday as traders digested the news.

Lonmin, which has a joint listing on the FTSE and Johannesburg Stock Exchanges, lost 258,000 tons of production last year following similar industrial action.