Mining Company research board

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South Africa: mine unrest to affect potential investment

Labor strife returns in South Africa's platinum belt
Mon, Aug 27 2012
Lonmin says violence spreads to eastern operations
Mon, Aug 27 2012

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PERTH | Thu Aug 30, 2012 1:57am EDT
(Reuters) - A wave of labor unrest and violence in South Africa's mining sector will have an impact on potential investments, the country's resources minister said on Wednesday.

Clashes between police and workers killed 44 people this month and shut ore output at mines run by Lonmin, the world's third largest producer of platinum, a precious metal with industrial uses.

"It is a cause for concern. The tragedy does impact on any potential investments," the South African minister for mineral resources, Susan Shabangu, told reporters on the sidelines of a mining conference in Perth.

"Any investor would like to invest in a stable environment, we've got to recognize that... as government we are committed to make sure what has happened will not happen again."

On Wednesday, South African unions, platinum producer Lonmin and government officials tried to broker a peace accord, but a wage deal may prove elusive, as the resolve of the striking workers is stiffened by the killings.

Returns from mining could not be made at any cost and mining companies have fallen short of providing adequately for their workers, the minister said.

"It's not only Lonmin-- the majority of mining companies in South Africa are not doing well when it comes to the social conditions," Shabangu said.

"The mining companies will have to come to the table, they will have to recognize that as they make higher returns, in turn they must contribute to the well-being of workers," she said.

Mine nationalization could not advance the interests of South Africa, she added.

South Africa's ruling African National Congress (ANC) had been expected to rule on a drive to nationalize the country's mines this year.

But the policy remains unclear although "blanket nationalization" - a sweeping buyout that would cost the state $132 billion - and a windfall tax appear to be off the table.

(Reporting by Rebekah Kebede; Editing by Ed Davies)