Post date: Sep 18, 2012 5:52:40 PM
Striking miners at Lonmin's Marikana mine in South Africa accept a pay offer to end a six week-long violent strike, though some say it may not have come soon enough to prevent long-term damage to the industry. Joel Flynn reports.
SOUTH AFRICA-MINING CRISIS - Striking miners at Lonmin's Marikana mine in South Africa have accepted a management pay rise of 22 per cent.
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They say they'll return to work on Thursday after six weeks of mining sector unrest.
Relief all round - but the country is still counting the cost of a crisis which left 44 miners dead and the economy damaged.
In those six weeks South Africa's currency tumbled, insurance against its debt rose and investors piled out of the lucrative industry.
Questions hung over the long-term viability of the precious metals industry and a return to work won't answer them all.
Nick Holland is the CEO of Gold Fields, a South African gold miner.
Gold Fields CEO, Nick Holland, saying
"One has to look also at the drop in productivity that we've seen on the South African gold mines as they've got deeper, and the grade decline as well, the Eskom [price of electricity] increases that we've seen over the last three or four years, and that together with additional carbon taxes, royalties, you know there's a lot that's been imposed on the industry."
Several other companies halted production as a result of the crisis.
A swift solution was vital for a country with a major chunk of the world's pr ecious metals.
Nic Brown, from Natixis, says mine owners generallly have little room for manoeuvre.
Natixis Head of Commodities Research, Nic Brown, saying
"At a price of $1,400 an ounce, the mining companies were barely covering their costs of production, let alone investment in new mines."
South Africa's President said the strikes have cost the country over half a billion dollars.
Lonmin lost 37 percent of its share price, and platinum prices jumped over 20 percent.
Natixis Head of Commodities Research, Nic Brown, saying
"Ultimately the way in which platinum prices are pushed higher is by reducing output, and either that is investments that don't take place in the future, or that is a shutdown of current output, and this is extremely painful process is what's playing out in South Africa at the moment."
Analysts say South Africa's problems could now emerge elsewhere.
Chile's copper industry - for one - operates in a similar way.
The agreements reached here will reshape the industry for better or for worse.
Joel Flynn, Reuters