Lonmin shares tumble as strike freezes output

Suzie Neuwirth
PLATINUM miner Lonmin’s shares slid more than seven per cent yesterday following news of a wildcat strike that halted production, reigniting fears of the violent unrest which put the company at a standstill last summer.

The FTSE 250 miner said that the situation is “uncertain and evolving”, but management is in discussion with the trade unions “to ascertain the reasons for the stoppage and to encourage workers to return to work”.

Lonmin recently announced that the militant Association of Mineworkers and Construction Union (AMCU) now controls 70 per cent of its South African workforce, after poaching members from the National Union of Mineworkers (NUM).

Yesterday’s strike is thought to be linked to the death of one of AMCU’s organisers, who was shot in the South African town of Rustenburg on the weekend.

A turf war between AMCU and rival union the NUM triggered wildcat strikes and violence last year that killed around 50 people in the mining industry.

Labour problems continue to trouble the company and overshadow this week’s announcement of pre-tax profits of $54m (£35m) for the six months to the end of March, which had more than doubled from the previous year.

Platinum spiked around 1.2 per cent yesterday on news of the strike and a report from UK platinum refiner Johnson Matthey, which said that platinum output was at its lowest in 11 years.

Wage negotiations with unions in South Africa also loom ahead for rival platinum miner Anglo American.

The world’s biggest producer announced last week that it would slash 6,000 jobs in order to return to profitability, which it is feared could trigger militant action.