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Lonmin in talks to restart South Africa mines as strikes widen

MYT 6:30:00 PM

JOHANNESBURG (Reuters) - Talks to end a deadly strike at the South African mining operations of world No. 3 platinum producer Lonmin resume on Monday after weekend funerals for over 30 workers killed by police.

Striking platinum mineworkers gather for a report back on negotiations at Lonmin's Marikana mine in South Africa's North West Province, August 29, 2012. REUTERS/Mike Hutchings
Striking platinum mineworkers gather for a report back on negotiations at Lonmin's Marikana mine in South Africa's North West Province, August 29, 2012. REUTERS/Mike Hutchings

Lonmin wants to restart production at mines idled for three weeks by labour strife which has spread from the platinum sector to bullion. Gold Fields said a quarter of its workforce has been on strike since Wednesday.

The stakes are high for Lonmin, which has a shaky balance sheet and was battling to contain costs even before a wave of labour violence that killed 44 people, including 34 striking workers shot dead in a single confrontation by police.

The violence stemmed from a bloody turf war between the dominant National Union of Mineworkers (NUM) and the small but militant Association of Mineworkers and Construction Union (AMCU) which has flared across the platinum belt.

Lonmin rock drill operators, who downed tools in an illegal strike on August 10, are demanding a more than doubling of basic monthly pay to 12,500 rand ($1,500). But other workers may also be in dispute.

"At the moment it is not clear if these demands are restricted to rock drill operators or if entry-level miners also want 12,500 rand a month," said Gideon du Plessis, deputy secretary general of trade union Solidarity.

Solidarity represents skilled workers who have not been on strike. But all unions have been involved in the talks aimed at getting ore out of the ground again.

It was not clear who would take part in talks on Monday. AMCU's leaders, who say they have been sidelined, say they will only show if they are invited.

Workers have sent their own delegates for negotiations and it is not always clear which union they are taking direction from, if any.

The talks are supposed to get people back to work with a promise to then deal with grievances. There is also hope that a "peace accord" can be reached between warring factions.

RACE AGAINST TIME

Lonmin, which accounts for about 12 percent of global production of platinum which is used in emissions-capping catalytic converters in cars, is racing against time.

It has said it will likely breach debt covenants by the end of this month and may have to issue new shares to shore up a balance sheet hit by lost production and revenue. The company's share price has fallen about 40 percent this year.

Investors, unnerved by the blood-letting in the platinum sector, have been shaken by the prospect of militant action spreading to country's deep gold mines.

The Sunday Times reported workers at a mine east of Johannesburg run by junior producer Gold One were set to strike on Monday to demand higher wages.

Gold Fields, the world's fourth largest bullion producer, said on Friday about 12,000 workers had embarked on an illegal strike at the east section of its KDC mine in South Africa.

Company spokesman Sven Lunsche told Reuters it was initially sparked by anger over funeral cover deductions but the biggest problem was rank and file discontent with the NUM.

Analysts say the AMCU and other upstart unions have tapped into a vein of discontent with the NUM, a key voting base for the ruling African National Congress which is seen as being more interested in politics and self-enrichment than the well-being of workers.

($1 = 8.4285 South African rand)

(Editing by David Cowell)

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