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Lonmin Deal Threatens More South African Mining Unrest

The South African labor unrest that has already crippled the country’s mining production is threatening to spread even further following Tuesday’s deal with a smaller mine company that has its rivals now demanding the same concessions.

South African police used tear gas on Wednesday to disperse protesters near a mine run by top platinum producer Anglo American Platinum (Amplats) after strikers there demanded the same pay increases accorded workers at smaller rival Lonmin.

Within hours after workers at Lonmin had agreed to a pay increase of 11 to 22 percent, their counterparts at neighboring mines were calling for similar hikes.

The latest developments suggest more trouble in store after six weeks of industrial action that has claimed 45 lives and threatened Africa’s biggest economy.

“We want management to meet us as well now,” an organizer for the militant Association of Mineworkers and Construction Union (AMCU) at Impala Platinum, the number two producer, told Reuters.

“We want 9,000 rand ($1,100) a month as a basic wage instead of the roughly 5,000 rand we are getting.” He declined to be named for fear of recriminations from the company.

Lonmin shares soared more than nine percent to levels not seen since police shot dead 34 miners on Aug. 16 outside its Marikana mine, 100 km (60 miles) northwest of Johannesburg.

However, the deal could add 13 percent to the company’s recurrent costs, plus an additional $10 million for a one-off back-to-work bonus. Lonmin is already battling with a shaky balance sheet and unprofitable shafts.

The settlement has also sown more strife in the area, with police clashing with an angry crowd in a township at a nearby Amplats mine outside the “platinum belt” city of Rustenburg.

Police spokesman Dennis Adriao said officers fired tear gas, stun grenades and rubber bullets to disperse an “illegal gathering”.

A labor activist said workers who have stayed off the job at Amplats, which accounts for 40 percent of global supplies of the metal used for catalytic converters in cars, were inspired by Lonmin and would press on with their demands.

“The mood here is upbeat, very celebratory,” Mametlwe Sebei, a community representative near Rustenburg, told Reuters. “Victory is in sight. The workers are celebrating Lonmin as a victory.”

Amplats had to suspend its Rustenburg operations last week because of the unrest. Those mines restarted on Tuesday, but the company admitted many workers had stayed away.

Platinum prices rose a little on Wednesday after falling 2.6 percent a day earlier on news of the Lonmin deal.

At Marikana, strikers celebrated their settlement as a triumph for AMCU, which exploded onto the South African labor scene in January when its turf war with the dominant National Union of Mineworkers (NUM) led to a six-week closure of the world’s largest platinum mine, run by Implats.

Thousands of Lonmin workers and their families gathered at a soccer pitch near the mine to sing victory songs and denounce NUM, a key ally of the ruling African National Congress (ANC).

The discontent rolling through the sector has found fertile ground in the shanty-towns that house many of the miners who claim they are not paid appropriately for doing the lion’s share of the work that has made their employers rich.

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