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september 06, 2012 • 01:47 AM • last update 10:29 AM

Militant South Africa union snubs Lonmin "peace deal"

Mineworkers take part in a march at Lonmin's Marikana mine in South Africa's North West Province, September 5, 2012.
Foto: Mike Hutchings / Reuters In English

South Africa's militant AMCU union refused to sign a "peace deal" with platinum company Lonmin on Thursday, undermining government-backed efforts to open pay talks and end a four-week strike scarred by deadly violence.

While Lonmin, the world's number three platinum producer, signed the accord with the National Union of Mineworkers (NUM) and other labor groups in the early hours, representatives of the Association of Mineworkers and Construction Union (AMCU) declined to put their names to the agreement.

AMCU-affiliated miners at the Marikana platinum mine where police shot dead 34 striking rock-drill operators last month in the deadliest security incident since the end of apartheid said they we're not interested in a deal that failed to include a basic wage hike to 12,500 rand ($1,500) a month - double what they now earn.

"I was there to talk about 12,500 rand, not some peace accord, so we did not sign any document," Molefi Phele, who represented striking workers, told Reuters Television.

Lonmin said it was open to talks with AMCU and striking workers on their wage demands - provided they returned to work by a Monday deadline - even though analysts say the company can ill afford such an increase.

The London-headquartered company said only 1.7 percent of workers reported for duty at its South African operations on Thursday, with miners saying they have been threatened with death if they went back to their jobs.

Finance Minister Pravin Gordhan told reporters he did not think the labor stand-off at Lonmin would affect the growth of Africa's biggest economy in "any significant way."

The strike has so far cost Lonmin about $95 million in lost output at its operations about 100 km (60 miles) northwest of Johannesburg.

Lonmin shares, which had lost 25 percent of their value since August 16, were up as much as 5 percent in afternoon trade in London amid hopes that the "peace deal" would open up a path to a settlement, despite AMCU's holding out.

"With this agreement the moment has arrived for AMCU and the striking workers to show whether or not they can function in a peaceful environment," said Gideon du Plessis of the Solidarity union of skilled workers.

CHALLENGE TO POWER

Marikana accounts for the vast majority of the platinum output of Lonmin, which itself accounts for 12 percent of global supply of the precious metal used in jewelry and vehicles' catalytic converters.

World platinum prices, which spiked more than 2 percent as the Marikana carnage unfolded, have continued to rise, and hit $1,584 an ounce on Thursday, the highest in nearly five months.

The strike has raised worries that labor unrest in the platinum belt could spread to the gold sector. South Africa is home to 80 percent of known platinum reserves and is the world's fourth-largest gold producer.

The violent rise of AMCU in the last 12 months is also the most serious challenge to the unwritten pact at the heart of the post-apartheid settlement - that unions aligned to the ruling ANC deliver modestly higher wages for workers, while ensuring labor stability for big business.

President Jacob Zuma cut short a foreign visit in the immediate aftermath of the Marikana shootings, but his wooden performance and heavily staged-managed meetings with victims and miners has damaged his "man of the people" image.

Zuma faces a re-election battle as leader of the ANC in December, and the crisis has given ammunition to critics who say he is compromised by links to industry and the powerful union movement, of which AMCU's rivals, the NUM, is a leading player.

(Additional reporting by Helen Nyambura-Mwaura, Jon Herskovitz and Mish Molakeng; Writing by Ed Cropley; Editing by Peter Graff)

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