South African Mining Union Sees Membership Fade

The National Union of Mineworkers, South Africa’s largest labor group, is battling to retain members in the platinum industry, stoking labor unrest at the world’s biggest mines as rivals lure workers.    

Police shot and killed 34 protesters at Lonmin Plc’s Marikana complex on Aug. 16 after 10 people died in fighting among workers, union representatives and police during a strike by rock-drillers that started on Aug. 10. Impala Platinum Holdings Ltd. shut a mine for six weeks this year in a similar dispute that left four people dead. Lonmin workers said NUM didn’t take their demand to increase wages to 12,500 rand ($1504) a month to the company’s management.    

“NUM has to some degree abandoned the poorest and the most disadvantaged sectors of the workforce,” Nic Borain, a Cape Town-based analyst, who advises BNP Paribas and Cadiz Securities, said in an Aug. 20 phone interview. “NUM is gradually slipping towards a state where it doesn’t have that overarching control. This kind of stability is going to come back to haunt them.”   

 The mining union, co-founded by businessman and politician, Cyril Ramaphosa, in 1982, has more than 300,000 members. A decline in support will allow other groups, such as the Association of Mineworkers and Construction Union, to recruit, leading to rivalry at operations and divided, lengthy pay talks.

South Africa is the world’s biggest producer of platinum, chrome and manganese and mines gold and coal. Anglo American Platinum Ltd., AngloGold Ashanti Ltd. and Xstrata Plc operate in the country.                     

‘Ultimately violence’   

NUM helped to rally black mine workers against whites-only rule and remains the largest affiliate of the Congress of South African Trade Unions, the federation that’s in a political alliance with the ruling African National Congress.    

Zwelinzima Vavi, Cosatu’s secretary-general, warned AMCU is being used to attack and weaken NUM by former union officials trying to boost their political influence.    

“The people behind these moves are playing with fire,” Vavi wrote in a column published by Johannesburg’s Sowetan newspaper yesterday. “What Marikana shows is that a divided and weakened workers’ movement is a recipe for instability and ultimately violence, which is a danger to society as a whole, including the employers themselves and their profits.”    

Some workers say NUM isn’t looking after their interests, having built up a close relationship with mining companies.                         
Decent salary    

“The National Union of Mineworkers doesn’t care about the workers,” said Thabo Moerane, a Lonmin supervisor who says he earns 5,000 rand a month after 32 years’ service, not enough to support his unemployed wife and six children. “It is eating with management. We’ve been trying to get a decent salary increase since 2007. That is why we wanted to join AMCU.”    

Each day of the Lonmin strike is costing the company about 2,500 ounces of platinum, used in jewelry and auto catalysts, worth an estimated $3 million, according to Absa Capital.

Platinum for immediate delivery rose to $1,518 an ounce in London today, the highest since May 8, according to data compiled by Bloomberg. South Africa’s rand weakened 0.4 percent to 8.2992 against the dollar by 10:20 a.m. in Johannesburg.    

South Africa’s President Jacob Zuma declared a week of mourning and agreed to set up a judicial commission of inquiry after police fired on protesting workers armed with spears, machetes and pistols.    

Violence could spread to mines across Africa’s biggest economy, according to Robert Besseling, senior Africa forecaster for London-based Exclusive Analysis Ltd.                           

Shut down    

“It will increase contagion risk to other mines, particularly in the platinum industry but also in the coal and iron-ore sectors,” he said by phone on Aug. 20. “There is the possibility of more violence and a complete shut down of operations.”    

Workers at Anglo American Platinum, the world’s largest producer of the metal, made demands directly to the company on Aug. 17, spokeswoman Mpumi Sithole said by phone today. They usually make wage and employment-condition demands through recognized unions.    

NUM membership fell below the 50 percent mark at Lonmin in December that allows it to negotiate on behalf of the workforce, according to a letter to the union from the company. It has since boosted members to more than 60 percent, NUM said last week. AMCU has about 30,000 members, including about 7,000 at Lonmin, its leader, Joseph Mathunjwa, said on Aug. 17.    

NUM isn’t losing influence, Frans Baleni, its secretary- general, said Aug. 16. The emergence of AMCU won’t impact on NUM or Cosatu’s political clout as they remain the largest labor groups, said Ramaphosa, executive chairman of Shanduka Group Ltd., who is also a former secretary-general of the ANC and a current member of its decision-making body. Shanduka owns a stake in Lonmin’s mines.    

“The other union obviously is trying to use what I think are underhanded means and raise workers’ expectations unrealistically to try and gain support,” he said in an interview at Marikana on Aug. 17. “NUM is a solid, realistic union that has a lot of experience.”    
              
Declining production    

The union represents workers during negotiations with the Chamber of Mines, which agrees wages and worker benefits for South Africa’s largest coal and gold companies. Platinum producers hold talks directly, and individually, with unions.    

Mining accounts for 8.8 percent of South Africa’s economy, makes up about two-thirds of exports and provides about a million direct and indirect jobs, according to statistics agency and South African Revenue Service. Output has declined seven out of the past 10 years, Statistics South Africa data show.    

NUM leaders failed to persuade protesters to return to work at Lonmin before the shootings last week, William Mpembe, a police official, said in a Aug. 17 interview. The crowd refused to hear them speak, he said.    

“NUM has now become conventional,” Geoff Heald, a senior lecturer at the Wits Business School in Johannesburg, said in a phone interview yesterday. “You have a situation that is very precarious and I think we can expect tough times.”

Bloomberg