Lonmin stunned as NUM schism opens

[miningmx.com] — LONMIN CEO, Brad Mills, has been cut off at the knees by the National Union of Mineworkers (NUM) which last week reversed a signed five-year pay deal. “NUM must sort itself out,’ said Mills. He was not prepared to comment further.

Mills has had mixed fortunes during his 12 months at Lonmin. A strategy to diversify the platinum producer, the world’s third largest, has been put on indefinite hold after shareholders grumbled. Lonmin’s acquisition of Southern Platinum, hatched as an alternative to diversification, has received a neutral reception.

But on Wednesday, Lonmin delivered a coup in which it had negotiated a five-year inflation related (CPIX currently at 3.8%) pay increase with NUM. Lonmin styled the deal a “New Era Labour Agreement’, jointly drawn up by a committee involving Lonmin’s management, and unions NUM, Solidarity and UASA.

Effective from October, Lonmin said the pay deal was “a living agreement’ covering its employees at Marikana. The quid pro quo was that employees would benefit from up to 25% of total cost savings achieved through a bonus structure.

“For the first time, labour and management are working together to build a healthy business and have both given up their adversarial past,’ said Mills oblivious to the approaching storm.

The deal was considered progressive, even by Lonmin’s rivals. “It’s a step in the right direction,’ said Ralph Havenstein, Anglo Platinum CEO. But two days later, the deal was in tatters. NUM said that union signatories to the deal were traitors.

“We categorically state that those who sign it [the deal with Lonmin] will be doing so in their individual capacity, and will be doing so because they are promised promotion for delivering the union on a platter to the company’s slaughterhouse,’ said Gwede Mantashe, NUM’s secretary-general.

With the smoke just clearing over the affair, it’s still unclear whether NUM’s about-face is worse for Lonmin or the union itself.

The agreement with Lonmin was signed by Victor Tseka, described in the announcement of the deal as “Lonmin Co-ordinator of NUM’. More importantly, it’s thought Lonmin’s deal had the support of Archie Palane, NUM’s deputy general-secretary. Mantashe’s subsequent rejection of the arrangement looks like a major schism between the union’s two most important staffers.

Moferefere Lekorotsoane, NUM’s spokesman, side-stepped the question of a schism in the union’s leadership. “The person who signed that document did not have any authority to do so,’ he said. Lekorotsoane said Lonmin’s Mills was told in a meeting with Mantashe as early as May 25 that its five-year deal would not fly.

“The negotiations have not ended. Lonmin has to continue negotiating with Jeffery Madida (the regional coordinator) and not Tseka until they’ve got a collective agreement,’ he said. Lekorotsoane said such an agreement would not be typical of NUM.

There’s much truth in that. Signing a five-year deal effectively prohibits the union from turning up the heat on employees across the gamit of their grievances during each wage negotiation period. It’s at such times that NUM exercises its greatest leverage.

The Lonmin reversal is a bad sign for the country’s platinum and gold producers currently in the second or third week of wage negotiations. Moreover, Monday signals a one day national strike.

“The unions have targeted the Rustenburg area in particular. Just to make the point,’ said Havenstein. In theory, wage increases should be lower this year than normal owing to the lower CPIX figures. But it would be naive to think so, says Havenstein. “Unions tend to de-emphasis CPIX and emphasis the wage gaps [between management and labour],’ he said.